So you've taken the plunge, bought a second property and started advertising for tenants. Maybe you've even found someone to move in and you're enjoying the first of your rent payments. However, you might feel disappointed that your profits aren't as high as you expected - what seemed like an easy, low-risk investment opportunity isn't quite paying off as much as you'd like. In a competitive market, it's hard to raise rent - if not impossible if you've committed to a certain price. That's why it's so important to cut costs wherever possible, to maximise your profit.
Self-administration
It can be tempting to take the services of a letting agent – they can help find you a tenant, perform the necessary background checks, provide you with all the essential paperwork and even take care of maintenance with an all-in-one service. You'll pay a fee for this, of course, which can very quickly eat into your monthly profits. If you have the time and skill, why not administer your property yourself? You don't have to jump straight into the deep end or abandon your agent completely – you can take over some parts of administration yourself while leaving the more difficult parts in the hands of a skilled professional. For example, with a little bit of DIY knowledge, you can tackle many maintenance tasks yourself – saving yourself the cost of having your agent and outside contractors deal with it. And dealing with clients directly isn't just cheaper, it can help build up a closer relationship for a better tenancy. Meanwhile, your agent can perform more specialised jobs like performing background checks.
Furnishings
Though it takes a upfront sum to furnish a house or flat, it can pay off very quickly – furnished properties typically command a 15-25% premium on the rental market, and it helps make the property more attractive to potential tenants as well. However, the cost and hassle of purchasing all the necessary furniture – bed, sofa, chairs and tables – tends to put many landlords off the idea. Providers such as David Phillips Furniture offer an all-in-one solution with a complete package for landlords. This includes free delivery and assembly, so you can save time and money.
Tax
You're entitled to certain tax allowances as a landlord, so don't be shy about taking advantage of them. Make sure you keep up-to-date accounts, so you can fill in your tax returns accurately and take advantage of deductions. And be sure of the expenses you can claim – this obviously includes mortgage interest, insurance and repairs, but it also covers anything from travelling costs, phone calls and hiring professional advisers.