Will One Maintenance Problem Swallow Up All My Rental Profit?
Yes, it can happen.
A big boiler breakdown or a roof leak that turns into a whole new roof renovation can take up your rental profit for a couple of months; it is always a risk.
Our viewpoint is that when it’s a big cost, it’s a capital cost.
It’s a big chunk of money right now but it’s a long-term capital cost. Let’s say a new boiler is around £3000 with a 10-year warranty, divide it by 12 and divide that again by 10, it’s not a great deal in the grand scheme of things.
We’ve encountered maintenance issues where we’ve chosen to expand and renovate, resulting in more works but increasing the value of the property.
Works can add up, and the value of the house increases, it’s happened to us many times.
When sourcing a house it may appear in good condition, but property sourcing can’t be taken at face value. It’s essential to source properly as you don’t want an issue popping up later down the line – be thorough.
We’ve carried out renovations to future-proof against all major potential issues it could have.
Even if a property is in good condition and a tenant can move straight in, you should still have a contingency plan for maintenance works to avoid issues later down the line.
When property sourcing, pictures on a website can look great and appear to be an absolute bargain, but this can be misleading. Our sourcers have found a property, weighed up from the images that it needs a few hundred quid spent on works, and viewed the property to find it actually needed thousands.
A picture isn’t always worth a thousand words- just thousands of pounds!
When finding a property, doing a full renovation to start with avoids major risks of expensive works cropping up in the future.
An important piece of advice from us to you- always have a buffer.
Having a buffer eliminates financial stress. It’s entirely up to you how much you put aside, but around three months’ rent or more is a nice, secure place to be.
If you’re a Landlord or want to be, always remember that voids, bad debts, and maintenance should not run more than 20%. Any accountant will tell you that.
Our ‘Success Plan’ also factors in this number and is turned over so you can see if you are spending over that and work it out. It may be a big bill on a new boiler; just average it out and break it down like we mentioned before.
It may just be the price of a coffee every month.
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