The benefits of hands-off property investments
As the buy to let mortgage celebrates its 18th year, there’s no doubt that demand is bigger than ever. With reports of landlords in the UK owning almost £1 trillion worth of property, many have been wondering what key attributes are needed to grow a successful buy to let empire.
One major issue that arises in the property investment world is whether to be a hands on or hands off landlord. While it’s always vital to base your decision on whatever situation works best for you, there is little question that if you’re after an income generating, stress free property then the hands-off approach is definitely worth considering.
Less hassle for investors
One of the main gripes that comes with dealing with a hands-on property is the unpredictable but sometimes unavoidable problems that come with property management. It’s almost guaranteed that late night phone calls, broken down appliances and temperamental boilers will be a common experience for the hands on landlord. It’s an issue that many investors don’t always take into account when purchasing a property, and even if they do, the scale in which tenants rely on them can become extremely overwhelming.
Hands off investments are becoming increasingly popular as it is essentially a case of having the best of both worlds. It is possible to reap all the financial benefits that property investment brings without the pressure of managing. Using a letting agent takes away many of the negative aspects that investors don’t want to deal with.
It’s important to gather all the facts and do your research before deciding what sort of investment solution best suits you. However, it is worth remembering that investing in a property is essentially a business and trying to do everything yourself becomes a juggling act, which, in the end, can become detrimental.
Time on your hands
Despite the general efforts that go into managing a property, even the most prepared and organised of landlords underestimate how time consuming owning one can be. Property management becomes a full time job, which isn’t always ideal for many investors who already have separate careers and projects outside of their investment activities.
In fact, some may argue that it becomes even more demanding than your average 9-5, as a hands-on investment essentially becomes a 24/7 commitment. Problems can arise at the most inconvenient time including weekends, evenings and during personal holidays. Even if a landlord is happy to take on the responsibility of tenants, it’s difficult to realise quite how much free time becomes dictated by it. If a property were to become vacant, the act of finding new tenants, organising viewings and making sure everything runs smoothly can take quite a while and can be costly if it’s done half-heartedly.
Lettings agents will already have a trusted list of people on hand and local to the area that can help with things like property repairs and upkeep. The Landlord Law blog states “A really good agent can be a blessing to a landlord. They carry out regular inspections, let the property for you and help ensure market values are achieved”.
Build up a portfolio
The sheer act of not dealing with the running of a property allows freedom to source several properties for a greater income. A hands off landlord can enjoy a low risk, low maintenance investment that makes building a portfolio of properties a much easier course of action.
The key to success in a hands off investment is to find a letting agent you can really trust. A survey from The Telegraph highlighted the value of having a reputable letting agent, who is a member of a registered body such as ARLA (Association of Residential Lettings Agents) or UKALA (UK Association of Lettings Agents), they can be extremely beneficial to investors with more than one property and often provide relief with practical issues. Some even have an out of hour’s service for their tenants.
Focus on profit, not a project
Hands-off investments are in huge demand; high yields are achievable and instant equity in the property is attained, and so a regular cash flow occurs. Even with agent fees, a hands-off investment would still look to make a sizeable profit on a property in a popular location with strong rental yields.
The appeal of this investment has not gone unnoticed by foreign investors too. According to news site, benzinga.com, interest has been coming in thick and fast from international markets. A hands-off solution allows the luxury of owning high yielding properties and generating an income despite not living in the same part of the world.
Carrying out research and thinking about what you want out of a property investment is a vital step, and ultimately, every investor will want something different. It’s important to recognise that saving money with a do-it-yourself attitude isn’t something that should be decided on a whim and that it is possible to become a successful and wealthy investor without a hands-on approach.