Tips to Avoid Problem Tenants in your Rental Property


Tips to Avoid Problem Tenants in your Rental Property


 

2345Having the right tenants in your property can truly make a huge difference in your ability to succeed in owning investment rental property. While problem renters can definitely exhibit some warning signs, there are some problem renters who are quite adept at getting past landlords. As a result, it is important to understand that you simply cannot always rely on your first impression of a prospective tenant in order to determine whether they will be responsible and reliable.

There are some tips you can use; however, in order to avoid tenants which could prove to be difficult.

First, always have prospective tenants complete a rental application. The application should be in writing and should provide you with the information you need to make a decision regarding renting the property. Along those lines; however, you need to make decking maintenance to make sure that you always follow laws, such as the Fair Housing Act. Discriminating against prospective renters is against the law and could land you in quite a bit of trouble. You are not allowed to deny someone the ability to rent your property based on religion, race, etc. By following the Fair Housing Act, you can make sure that you do not violate any discrimination laws.

Always make sure that you obtain proof of identity. This includes seeing a photo identification from any prospective tenants that you interview. On the rental application you have prospective tenants complete, make sure they write down their driver license information. Make a copy of the photo ID and be certain that you attach it to the rental application.

Many landlords make the mistake of not performing a background check. This is a mistake that you cannot afford to make if you want to ensure that you avoid potentially troublesome tenants. Performing a background check gives you the opportunity to determine if there are any previous problems. For example, running a background check can let you know if a prospective tenant has a history of destroying property or skipping out on the rent.

Along with a background check, you should also perform a credit check. You will need to obtain the applicant’s permission in order to do this; however, you can do this on the rental application. You will also need to obtain the applicant’s Social Security number on the application to run a credit check.

References are also essential. Make sure that you obtain the name of the applicant’s previous landlord so you can follow-up. This is because not all landlords make a report to the authorities when there is a problem, so by checking with the landlord directly you have a better chance of determining if there were any problems.

In addition, ask for character references. Make sure that you take the time to actually check with those references. If the applicant did not give you a valid reference this is a good way to find out about it and weed out the applicant.

Finally, make sure that you include information regarding a code of conduct with each application or lease. The code of contact should state what is expected of the tenant and have the prospective tenant sign and date the document. By making sure that these expectations are clearly outlined in the beginning, you can help to avoid a number of problems.

Why Harpurhey is popular with property investors

The district of Harpurhey is situated approximately three miles from the centre of Manchester. With a population of around 18,000, Harpurhey is a vibrant and popular area with plenty of local amenities. This makes it a favourite among renters who want to be close to the city centre but can’t afford high-end property prices. Despite its somewhat variable reputation, Harpurhey has an active property rental market and offers some great prospects for landlords and agents.

Neighbouring districts of Harpurhey include the popular residential areas of Cheetham Hill, Monsall and Moston. The areas of the Shiredale Estate, Barnes Green, the Kingsbridge Estate and the Baywood Estate are all classed as being part of Harpurhey.

Road and public transport links

Located to the north east of Manchester city centre, the area enjoys excellent public transport links with the city and the surrounding areas. The A664 (known locally as Rochdale Road) runs through the Harpurhey area, offering good road links to Manchester city centre, to the south west, and to the M60 to the north east. The circular M60 motorway provides easy access to the region’s other motorways and major roads, ensuring reasonable commute times to many of the towns and cities of the north west.

Harpurhey does not have a railway station, but enjoys excellent bus links. Many major routes pass through the area, offering quick and frequent journeys into the city centre. Bus services also operate to Oldham and Salford, in addition to many other areas of Greater Manchester. Harpurhey is also convenient for Manchester’s Metrolink tram network; while there is no tram station in Harpurhey itself, those at Central Park North and Monsall are within easy reach.

Local amenities

North City Library, situated on Harpurhey’s Rochdale Road, is a local landmark and hub of the community. Sharing the building with the local sixth form college, the library features state of the art solar panels on its roof and is built in an impressively contemporary style. As well as offering all the usual lending and internet access services, the library is home to a number of local groups and societies who use the building to host meet-ups and events.

The North City Family and Fitness Centre is a sizable leisure centre located near to the local shops and daily market. With a 25-metre swimming pool and a number of other fitness and leisure facilities, the centre is popular with residents of all ages. The gym and health suite offer state of the art fitness facilities, as well as steam rooms, saunas and a spa area. The centre hosts a number of regular fitness classes for all ages and abilities.

Harpurhey has a popular shopping precinct with a number of high street chain stores, discount retailers and supermarkets, including Asda, Iceland and Lidl. Harpurhey Market operates on Tuesdays, Fridays and Saturdays and is completely under cover, making it a popular shopping destination all year round. Stalls include a wide variety of food retailers, as well as clothes, homewares and electronic goods.

Parks and green spaces

Harpurhey’s Queen’s Park is popular with families, thanks to its play area and frequent outdoor events. Originally developed over 150 years ago, the park was one of Great Britain’s earliest municipal parks. Hendham Hall originally stood in the park, but was demolished in the late 19th century. In addition to children’s play areas, paths and trails, the park has rose gardens and often hosts nature hunts for local schools.

Located to the east of Harpurhey, Moston Vale is another popular outdoor spot in the area. After being notoriously run down for many years, recent regeneration projects have transformed Moston Vale into a green oasis. Primarily used as a pedestrian access route, Moston Vale has been planted with wildflowers and had new fences installed to make it a really pleasant part of the area.

Harpurhey property news

Harpurhey offers a variety of options for the private buyer or property investor, with prices more affordable than other areas of the city centre, offering strong return on investment. Prices for traditional, two-bedroom red brick terraced houses start at around £70,000, with many available for under £100,000. There are also a number of newer properties in Harpurhey, with the modern Kingsbridge Road development extremely popular with families. Offering sizable gardens, excellent parking and modern fixtures and fittings, the new-build homes make an excellent rental opportunity for investors looking for properties that do not require any modernisation and which are easy to let.

Buy-to-let investors – is Landlord Ltd. the answer?

As far as buy-to-let landlords are concerned, April 2017 is not so much a red-letter date as a red ink one. That’s the date when a series of tax changes start to come into force which are going to decrease their profits and increase their tax liability.

Until now, landlords have been able to subtract mortgage interest from rental income, before calculating how much tax they owe. Not after April. Changes will be phased in from April onwards which by 2020, will result in landlords paying tax on the entire rental income their property earns. If the fat-cat landlord ever really existed, they are certainly a thing of the past.

Needless to say, given the world-beating complexity of the UK tax regime, the changes aren’t that simple. The landlord will be due a tax credit of 20% of the total interest they pay, but the entire rent will be taxable. Higher rate tax payers will be much harder hit because the rent will be taxable at the higher rate. And of course, a landlord who is paying 45% tax, will be worse off still.

The people at MoneySupermarket.com have been busy crunching the numbers and they reckon that if you are a higher-rate taxpayer and the mortgage interest is 75% or more of your income from the property, the tax changes will eliminate your return on the investment. For someone paying the additional rate of tax, this will happen when the interest is at 68% of the rent.

If you are a small landlord with just one property, you may be breathing a sigh of relief, if you are on the basic rate of tax. But wait a moment. Since your taxable income will go up as a result of the changes, you may well become a higher rate tax payer.

Is there any way to protect yourself from the changes?

Companies which own property and let it out are not affected by the rental tax changes. They can carry on paying corporation tax on the profits and paying dividends and salaries to the company directors. But before landlords rush to become limited companies, they need to be aware of the many tax complications and possible pitfalls in taking this step. They certainly need to take professional advice.

The company needs to be set up properly to buy the property, and this has to be achieved with the correct paperwork. So don’t necessarily assume the cheapest set-up that you find is the best choice. It is better to get an accountant to do this for you.
And although companies aren’t affected by the tax changes on rents and interest, they are affected by the stamp duty changes which mean that there’s 3% extra stamp duty payable by any person or company buying a second property when they already own one.

As for transferring properties you already own into a company, there are a host of tax complications.

Buy to let investments still competitive

The fact is that many people, not just those on very low incomes or on benefits, need to rent property and in Manchester lettings agents are as busy as ever. Tenants need landlords to provide a stable and active property rental market.

Professional landlords, holding large portfolios of property can probably look after themselves but the small landlord with one or two properties is going to be more adversely affected. One of the effects may be that the average age of landlords rises, as people in work are not going to want to be pushed into higher tax bands by the income from a rental property. They may wait until they retire to move into buy-to-let.

For retired people looking for additional income, even though the tax benefits of buy-to-let have been greatly reduced, given the woeful returns on savings, the income from owning rental properties looks very attractive and there is always the possibility of increases in property values.

Furthermore, mortgages for buy-to-let are becoming increasingly available for older people. For many retired people with lower outgoings and perhaps no mortgage left on their own home, the affordability criteria for these mortgages are not stumbling blocks to anything like the same degree as they are for younger borrowers.

The Chancellor has done his worst, but buy-to-let is still with us and while interest rates on savings are below 1%, landlords are unlikely to give up on their investments.

What the June 2017 Election will mean for North Manchester Property

Today, the Prime Minister announced a snap General Election for 8th June 2017, providing the vote to overturn the Fixed Term Parliament Act goes through tomorrow as expected, once again Britain will go to the polls on 8th June.

Politics isn’t really my bag, I don’t get fired up and passionate about it like I do about Property and the Property Market, but it seems like I am increasingly commentating on the latest political flavour of the month as more often than not they’re having direct impacts on either my landlords, my tenants or both!

In the past year alone I have got on my high horse about: The Rental PledgeRight to RentImmigration ActThe Housing and Planning BillRegulation of Buy to Let Mortgages, Brexit,  Licensing, Buy to Let Mortgages, and Clause 24, also known as Section 24, also known as the Tenant tax, this has been a big one for me see here, here and here

The I also comment on the effects of government policy like: Greater Manchester sees record number of evictions, What does the Budget Mean For Us? and The benefits capital of Britain is revealed: New map shows which parts of the country guzzle the biggest chunks of UK’s £161BILLION welfare bill.

So whilst I offer the caveat that politics isn’t really my thing, I certainly seem to have a lot to say on the matter, and so I should, as it directly impacts on me both as a landlord and as a business owner and I can see it directly impacting upon my tenants too. Today’s announcement will take up a lot of attention in the media and all around the internet for the coming 6 weeks, we will still be issuing our regular blogs, videos and social media updates, but will also be available to talk with anyone who has any questions or concerns about the North Manchester Property Market

I manage property across 10 Labour constituencies in North and East Manchester, given the disarray within all of the opposition parties, I expect conservatives to gain more seats. Its doubtful these will come from my constituencies, but there’s a chance.

From a wider perspective, a stronger conservative majority will mean Brexit could move smoother, if the result goes as expected, less overall drama and more getting meat on the bones of negotiations and deals. This could add some further stability and confidence to the economy and help continue the stable growth of the country. With no huge build programme on the horizon, demand for property will remain strong and prices will continue to grow.

More restrictions will apply to benefits and a tightening of the benefits cap, which will have a particularly telling affect on tenants in North Manchester.

What are your thoughts? have your say in the comments below

Britain’s biggest buy-to-let investors have sold nearly half their £250m property portfolio – Should You?

The Wilsons are an extraordinary couple. Fergus and Judith were both previously maths teachers. But starting in the mid-1990s they built up a buy-to-let property empire that eventually led to them owning 900 houses in Kent.

They put their success down to the appearance of buy-to-let mortgages with favourable terms which enabled them to expand their portfolio quickly. In those days, it was easy to get loans with a high loan-to-value ratio that were also interest-only. In fact Fergus Wilson has claimed in an FT interview that in those days, the only requirement was that you could spell your name and that checks were almost non-existent.

However, recently the couple have sold off about 400 of their properties in Kent, mostly to overseas buyers. Mr Wilson thinks that the era of the amateur landlord is over and that life is much tougher these days for people trying to acquire a buy-to-let property. In the article, he quotes 60% loan to value mortgages as a particular problem.

The FT quotes OneSavings Bank which has decided, since Brexit, to focus on professional buy-to-let investors since it considers that they will be better able to ride out any market volatility. It has also tightened lending criteria for smaller landlords.

Meanwhile Mr Wilson, who one suspects never listened to this kind of advice but ploughed on regardless, is waiting to complete the sales of property within his portfolio, pay off his mortgages and hopefully walk away with £200 million profit.

Although he doesn’t own property in London, he describes a type of overseas buyer who is desperate to obtain a property in the UK. He believes that Brexit will in the short term assist these buyers, as the fall in sterling will help them to afford a property in the UK.

He believes that in the longer term, UK property prices will be underpinned by the shortage of housing and that the developers cannot possibly deliver the numbers of houses that are needed in the next 15 years.

It’s likely that one of the Wilsons’ motivations may be retirement as both are at the age where the challenges of running a large property portfolio may be just a little too much. It’s certain that a new generation of keen private landlords are seeking to replicate their success, no matter what the challenges.

One of the challenges for landlords who are in the business long term is to keep up with the constant changes in legislation that affect the property rental business. This is a key reason to employ an agent who can keep up with them on your behalf and let you know about the issues that are relevant to you.

The Association of Residential Letting Agents (ARLA) has apparently said that there are currently 160 regulations that apply to property rental. Add to this the assured landlord schemes and guidance that landlords are supposed to take on board, and you can see how someone who has say, two or three Failsworth lettings, might feel overwhelmed by the level of regulation with which they must comply. What’s more, with the law constantly being challenged by court cases, the interpretation of it can change rapidly.

This is why landlords who don’t want to find themselves on the wrong side of the law employ a professional lettings agent to advise them. Only an agent who has looked at your particular property can advise as to what specific legislation you may need to take into account.

Of course, some new laws can be helpful to landlords. For example, landlords are now able to carry out checks known as “Right To Rent”. This will allow them to check that the person they are thinking of signing up as a tenant has the right to be in the UK. This will help them to avoid the potential £3000 fine for each tenant who is here illegally.

Some commercial finance websites are also reporting that around a half of landlords are intending to raise their rents next year. If returns are falling, many landlords will feel under pressure to increase rents in order to restore some profitability to their portfolio.
The Wilsons may feel that it’s all become too much effort and that now is the time to cash in their portfolio.

Possibly so, but one thing is certain – there will still be plenty of willing buyers out there.

How To Let Your House Faster

This week our lettings manager, Joe, discusses a real life example of a landlord increasing the rent on a property by 35% and managing to let this property within just one day. He talks about the benefits of properly maintaining a property, and how cosmetic improvements can have a huge difference on your return on investment as a landlord.

The North Manchester Rental Property Market continues to boom and demand is at a never before seen level, as an independent agent, Joe is helping landlords across the city realise the potential of their investments and achieve maximum returns. You can see more videos like this on our youtube channel: www.youtube.com/channel/UC1De9fjnKz1NtdI45iZE9XA/videos

To talk further with Joe about Investing in property in North Manchester, call him on 0161 681 3724 or drop him an email joe@brentwood-lettings.co.uk

 

 

Blackley School Praised by Ofsted

Following two previous inspections deeming the school as inadequate, the leadership teams at Our Lady’s High School in Higher Blackey have completely transformed the failing to school to become a school that is rated “Good” in all areas. The latest Ofsted report has praised the efforts of the staff to turn the school around.

Headteacher Lee Ormsby took over at the helm of the school in 2015 and has been working relentlessly with senioe leadership, staff, parents and pupils with a mission to develop all students to their full potential.

Many of our tenants have children who attend this school, and like us they are proud of the huge feat achieved by the team at Our Lady’s RC High. With Blackley becoming an ever more popular choice with renters, especially those with young families, this result by Ofsted has cemented Blackley as an up and coming area for property investment and this school one to watch for the future.

Well done to Our Lady’s RC High

 

DSS or Dogs?

Yesterday a very intersting article was published on the BBC website: No DSS: Most flat shares refuse benefit claimants

It claims that landlords are twice as likely to accept potential tenants who own pets than people who claim benefits.

The article goes on to look at the case of one particular tenant, Eva, who is a single parent, working full time but having her low wage subsidised by Housing Benefit. Day in day out we come across numerous people like Eva, hard working, honest people who have become victims of a stereotype and face discrimination due to their circumstances. We do not recommend or condone lying about your circumstances to obtain a rental property, often with our tenants it is the case that we can sit down and work together to agree affordability and help find a suitable property, as we understand the local market and our landlords tend to be receptive to tenants in receipt of benefits.

The private rented sector has doubled in size since 2002 and now accounts for 20% of all UK households, recent cuts in welfare means benefit payments in many parts of Manchester no longer cover the rest.

You can see our thoughts below on this short video regarding renting to people on housing benefit

 

Every week our Lettings Manager, Joe, makes a short video in response to enquiries throughout the week, if you’re interested in viewing more of our videos you can do so on our YouTube Channel

Investing in Rental Properties

Brentwood Lettings work out of North Manchester and East Manchester, we know this side of the city like the back of our hands and have our fingers on the pulse when it comes to buying investment property.

drawing-of-three-houses-where-it-reads-buy-renovate-resellThere are many ways in which a person can make a living when it comes to property investing, some of them carry more risks than others.  It goes without saying that those that carry the greatest risks are often the very real estate investment methods with the highest potential profit but slow and steady, in many cases, wins the race. Flipping houses is in the news a lot because so many fortunes have been made doing this-more than a few have been lost in this venture as well but those don’t make the news nearly as often.

Working with rental properties isn’t nearly as glamorous and doesn’t provide the almost instant profits that flipping houses might but it is also a great and very valid method of property investing that will build a steady profit over time if you plan properly.

Rental properties, in Manchester are in demand now more than ever with so many people going into foreclosure and losing the homes they’ve worked hard to build for their families. For this reason rental properties are a good thing to own at the moment, especially those that are family homes.

There are many reasons that people rent and while there are some risks involved when renting properties, the risks are much lower than the risks involved in flipping or pre-construction investment endeavors. There are a few things you should consider when purchasing a property for the sake of renting however in order to make a wise and long lasting decision for your real estate investment.

location for rental property in manchesterOnly invest in rental properties in areas that people want to live in.

It may be true that you can buy property cheap in a few very run down sections of town but it is doubtful that you will turn those properties into profitable rental units. It is best to pay a little more for a more attractive address for renters. You will find that your properties are inhabited more often, which will make you more money in the long run.

Unsure? this is where we step in, we can tell you in an instant if an Area, a Street or a House is a good buy for renting or is likely to cause you problems. How? We live and breathe property lettings in Manchester, we know each and every street as if it were our own.

 

Pay attention to the types of people in the area and buy rentals accordingly.

types of tenant

It is quite possible to turn large homes into multiple smaller apartment units (according to local zoning laws) that are ideal for students. You do not want to do this however in an area that is geared towards family homes and won’t be friendly or tolerant of college students. Design the rentals according to the market you are attempting to attract.

Unsure? Again thats where Brentwood Lettings can help you, we have helped literally thousands of tenants, from all walks of life find a home in Manchester. We can tell you, the investor, more about your property, its chances of securing good quality tenants, the type of tenants you’d be attracting and how to best present your property for rental.

 

 

 Don’t be greedy.

The goal of owning rental properties is of course, to make money. At the same time if your price your properties too high you will find that they sit empty more often than not. Every month that your property is empty is a month that you aren’t making money on that property at best and a month that you are losing money at worst.

Know the market.

Study the local market for buying real estate and renting real estate. This will help with many things, not the least of which is determining whether or not any given property will make an attractive rental unit. Another thing it will help you determine is how much rent the units you are considering can bring in month after month.

 

When renting properties you need to keep your eye on the long-term goals rather than shortsighted goals.

Property rental is a marathon rather than a sprint with the greatest profits coming at the end. You will want to pay as little interest on the property as possible and pay the property off as quickly as possible in order to realize the maximum profit potential and acquire new properties. The real money when renting properties as a real estate investment isn’t in renting out one or two units but twenty or thirty. The more rental properties you own the more money you stand to make from owning them.

£13.8bn – The Value of The North Manchester Property Market

“How Much Would it Cost To Buy All The Houses and Flats in North Manchester?”

This fascinating question was posed by the 11-year-old son of one of my landlords when they both popped into my offices. At the time I didn’t have an answer for him, instead throwing my hands in the air I smiled and vaguely answered “hundreds of millions”. I hadn’t ever thought about the total value of the market, so I thought to myself that it would be interesting to sit down and calculate what the total value of all the properties in North Manchester are worth.

Now this isn’t something that you can just google lightly and ping receive an answer, you can readily find information on house prices and trends, you can find population data on a city wide basis and lots of vague demographics dotted around, but nothing readily prepackaged to tell you 1) how many houses are in an area and 2) what the values of those houses are. It took me considerably more work than I first anticipated and became a bit of a mission for me to solve this problem.

I started with the city council, then went to the office for national statistics, then pulled census data and land registry files. I quickly found myself with reams upon reams of data which all gave lots of clues, but no definitive answer.

When I delved into the numbers, the first thing I found was that the average price currently being paid for a North Manchester property stands at £99,229.  Which seemed a little low, so I split the property market down into individual property types in North Manchester; the average numbers come out like this.

 

Curious as to how the figure settled at £99,229 I then looked at the distribution of the types of homes in North Manchester, and found this:

 

Working out of Moston, and area heavily packed with street upon street of terraced houses, I wasn’t too surprised to see terraced houses dominating the statistics for North Manchester. However, what was initially surprising was the figure for the number of flats.

I initially wrote this figure off as being inflated by bedsits, converted homes, flats above shops and some of the larger mixed use commercial buildings. However, I chose to dig a little deeper into the distribution of the types of flats in North Manchester and this is what I found:

 

Although, from working in the North Manchester property market for the best part of my life, I did appreciate there were a fair number of flats, I hadn’t until now got my head around the fact that there were just shy of 28,000 flat in the area, of which over 24,500 were within custom built blocks or tenements.

 

A cool £2.1bn could bag you ALL of the flats in North Manchester. Sitting at the lowest price point the local flats are offering astounding returns on investment as rental properties and are in very high demand with the young professional market.

If you happen to be a multi billionaire, check down the back of your sofa, in that pair of jeans that you don’t wear but are hanging onto incase they fit again or in an old coat pocket- if you happen to find a spare £2.1bn give us a call and we’ll talk about investments.

If you’re not a multi billionaire, and like me you’re just a regular person trying to save for the future and provide security for your family this information may seem pie in the sky, but I promise there is a point to it all.

What does this all mean for North Manchester Investors?  

Well as we enter the unchartered waters of 2017 and beyond, even though property values are already declining in certain parts of the London property market, the outlook in North Manchester remains relatively good as over the last five years, the local property market was a lot more sensible than central London’s.

North Manchester house values will remain resilient for several reasons.  Firstly, demand for rental property remains strong with continued immigration and population growth.  Secondly, with 0.25 per cent interest rates, borrowing has never been so cheap and finally the simple lack of new house building in North Manchester not keeping up with current demand, let alone eating into years and years of under investment – means only one thing – yes it might be a bit of a bumpy ride over the next 12 to 24 months but, in the medium term, property ownership and property investment in North Manchester has always, and will always, ride out the storm.

 

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