Please don’t view being a landlord as “buy a flat with a mortgage, don’t worry about it, reap the rewards”.
It isn’t like that at all.
If you want to be a successful landlord you have to be able to afford it. That might sound like an odd thing to say. Why would you possibly not be able to afford it “when the tenants are effectively paying the mortgage”?
Well that is your first mistake. You need to view it as the tenants paying their rent and you are paying your mortgage.
If your tenant stops paying the rent it is not up to the agent to answer the question “but how am I going to pay the mortgage. Tell them they have to pay the rent”. Nor can you go round and ask the tenant the same question if you are managing the property yourself.
No, you need to make provision for your mortgage in the event that the tenants default. As a word of advice, if your tenants don’t pay the rent and you have to evict them through the courts you are looking at six months before you can have possession. Six months. Can you afford that? I have known landlords come close to losing their own homes because a tenant in a rental property has stopped paying the rent.
There are plenty of companies that offer “rental protection insurance” now. You may think “I am not paying 3% of the monthly rental” but that equates to £18 a month on a £600 rental, totalling £108 over six months. Versus £3,600 over the same period if your tenant doesn’t pay you. Now I am no maths whizz, hell, I don’t even have a maths GCSE but even I know which one I would be going for.
As a landlord you also need to be aware that it is your responsibility to replace things that break. Can you afford to go and buy a new washing machine? Or worst case scenario a new boiler? You have a legal obligation (Section 11 of the Landlord and Tenant Act 1985) to carry out certain repairs. “I cannot afford it” or “it was fine when I / last tenant lived there” are not a valid defence. And in fact, if I had a £1 for every time I had heard that, I would be writing this on my yacht.
So please. If you are thinking of becoming a landlord, do your sums first.