7-point property checklist for prospective landlords

There’s no denying that investing in a rental property can be a lucrative side hustle, but it’s also one that can be complex and challenging. For those looking to get into rental investment, understanding what to look for in a property will ensure you’re spending your money wisely and choosing a property that’s safe and suitable for your tenants. We’ve put together a list of pointers to help you evaluate each property carefully so you can make an informed decision and avoid the common pitfalls that many investors struggle with.

Conduct pre-purchase considerations

The research you do before you buy a property is more important than anything else – it’s what will assess the integrity of the building and reveal any potential issues with the walls, roof or foundations. Investing in a property survey will ensure that any property you’re thinking of buying is up to code and functioning safely before you start renting out.

There’s a spectrum of problems that might be uncovered, from those that are easy to repair yourself to issues that will be too costly to fix and may mean you need to walk away from the purchase entirely. But whatever problems the survey uncovers, it’s best to know before you sign on the dotted line.

Assess the location

While the property itself is obviously the main factor, you also need to think about where the buy-to-let is situated. It plays a big part in its appeal and long-term value and could impact the interest you receive once it’s on the market.

From the neighbourhood’s crime rates and safety to future development plans that could affect the area, it’s important to thoroughly research the locality to make sure it’s appropriate. Be sure to check access to public transport, amenities and schools to ensure that the property is suitable for a wide range of tenants.

Evaluate the property layout

A survey will uncover hidden issues and repairs needed for the property, but you should also choose a property that offers a practical layout for renting. For example, are the rooms of a big enough size that you could comfortably fit a double bed in them? Is there sufficient space in the kitchen for appliances, and space for storage?

A rental that’s too small to live in comfortably won’t be appealing and could be hard to rent out, making your investment worthless. You want your tenants to be comfortable and happy where they’re living – it’s the key to minimising tenant turnover – so assess the property carefully and consider how a tenant would realistically live there.

Determine fair pricing

The financial viability of your investment starts with the purchase price, but it doesn’t end there. You need to compare the price of the property with similar properties in the area to ensure you’re getting a fair deal, and also factor in the potential for appreciation over time, which will contribute to your return on investment.

To determine rental income potential, research current market rents in the area and be sure to account for vacancy rates, which will affect your cash flow. Understanding the local rental market will help you set competitive yet profitable rental rates. Local estate agents can help you here.

Calculate your ongoing costs

Operating costs are a concern for any landlord, especially those new to the industry. Landlords need to factor in taxes and insurance premiums, which can vary significantly depending on the location, as well as maintenance and repair costs, which will impact your overall profitability. Depending on whether you’re planning on offering a furnished property or including bills in your rental agreement, you’ll also need to consider utility costs which can fluctuate year to year.

Long-term maintenance is a critical aspect of property management and something that many prospective landlords don’t plan for enough. Remember that major systems, such as heating, plumbing and electrical, or roofing, will need to be updated or serviced from time to time to avoid unexpected expenses down the line. Setting aside reserves for future repairs will ensure that you can maintain the property in good condition.

Match to your target demographic

Understanding your target demographic is crucial for maximising rental yields and reducing the risk of vacancy periods. Consider whether your buy-to-let property is best suited for young professionals, families, students, or another group entirely. This will inform both your marketing strategy, as well as the type of property you choose to buy.

Once you’ve identified your ideal tenants, tailor the property to meet their needs. This might mean adding amenities or features that appeal to them, such as high-speed internet for young professionals or secure play areas for families. The design and interior decor should also reflect the preferences of your target market to attract the right tenants once it’s on the market. Does the property you’re looking to buy already fit the bill or will you need to redecorate in order to make it suitable?

Identify value-adding opportunities

Renovations can be a cost-effective way to increase your property’s rental value, but not all properties are suitable. You want to focus on upgrades that will offer you the best return on investment, such as modernising the kitchen or improving energy efficiency, as these will make the rental more attractive to potential tenants. What’s more, they could result in higher rental yields.

Consider whether there would be opportunities for these types of changes, such as, sufficient room in the kitchen to reconfigure the layout, or if the heating system will accommodate a renewable energy set-up. You don’t want to invest in a property where you can’t make changes if you want to in the future.

A thorough evaluation of any investment property is essential for landlords looking to make a sound investment – particularly for those investing for the first time. By carefully considering factors such as location, property condition, financial viability, and target demographics, you can ensure that your property will attract tenants and provide a steady income stream.