You should now know, from our financial mini-series the real cost to buying an investment property & how to finance your first property investment. The finale of this series is the real cost to managing a property investment.
It’s important to know the costs as these are all factors that will affect your bottom line:
➤ Landlord insurance: As a landlord, you’ll need to have landlord insurance to protect your property. The level of insurance varies greatly & some of the most comprehensive insurance covers lost rental income as well as everything else! This can be a significant expense, and it’s important to shop around for the best deal.
➤ Gas safety & electrical checks: New legal requirements means that a properties electrics & gas must be checked by registered professionals prior to a tenant moving in. This can cost upwards of £150.
➤ Property management fees: If you don’t plan to manage the property yourself, you’ll need to hire a property management company. These companies typically charge a fee of 8-12% of the monthly rent, which can add up over time.
➤ Property taxes: As a property owner, you’ll be responsible for paying property taxes. This can vary depending on the structure your properties are in.
➤ Maintenance and repairs: As a landlord, you’ll be responsible for maintaining the property and making any necessary repairs. It’s important to budget for these expenses, as they can add up over time. A general rule of thumb is to put away 10% of the monthly rent, every month, as a buffer pot of money.
➤ Service charges and ground rent: If you’re buying a leasehold property, you’ll need to pay service charges as there are communal areas in the building they need to be up-kept & sometimes ground rent.
Did you account for all the costs above?
To learn more, read all of the financial series blog posts on our website.
At ERE Property, we source development deals in high-growth areas with strong yields and the best long-term capital gain prospects.
Contact us today to discuss our UK property hotspots and find a property suited to your needs and budget!
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