Self-management of a rental property necessitates exceptional organisation, and one of the best ways to pull this off is to treat your properties as if they were a business.
When you hire someone to help you manage your properties, you can be as involved or as distant as you want, depending on your goals. It would be best if you kept your finger on the pulse when you're on your own.
There are no correct or false to write a business plan. It is beneficial to be as thorough as possible, conduct research, including relevant facts and figures, and be willing to back up your claims with evidence. Remember that a lender may want to see your business plan before lending you money.
Creating a business plan will assist you in determining what your property business's objectives are and how you intend to meet them. It would help if you also created an exit strategy so that you have an overarching goal to work towards. A proper business plan will also assist you in documenting potential risks to your business and ways to mitigate them, making it much easier if they occur.
Overall, a business plan will guide you to be more professional and organised and make better, more informed decisions about the operation of your business. Do you know who else can help you determine your business plan and action strategy? Believe it or not, your accountant. Accountants have a deep understanding of UK accounting and tax regulations. They understand the market (can advise on whether or not to expand) and have your best interest at heart. No one will say it like it is more than your accountant. Find out how our accountants and tax advisors at Elena Meskhi & Co can support you and your property business.
If you decide to hire a letting agent, a fully managed letting agent will likely manage your finances and produce reports to assist you in filing your tax return.
You must keep track of your finances if you are self-managing. Property management software can assist you in this, and some even have their accounting engines, making tax management much more manageable. Even if you're not using property management software, it's a good idea to use some accounting programme to keep track of everything. Do you know what to look for in accounting software?
Finance management is something you want to focus on. If you despise accounting and don't understand it - and you're not alone - consider hiring a bookkeeper or an accountant. It makes good financial sense to get your finances in order, as it is much less expensive than accumulating HMRC fines. Additionally, when you hire Elena Meskhi & Co’s accountants and tax advisors, you will always have a full understanding of your financial position and tax liabilities, hence, making the right decisions for your property business.
If you've been in the property business for a while, you may be familiar with market research, but if you're self-managing, you'll need to do it regularly.
There are many questions you want to answer with market research, but the end goal is usually the exact product-market fit.
You must, at the very least, ensure the following:
-Your property is suitable for the tenants you are looking for.
-There are a lot of your ideal tenants in the area where your property is located.
-The rent is competitive with the market.
You should look into other rental properties in the area. Find out what rents other landlords are getting, how much demand there is, and so on.
To expand your portfolio, you must go beyond the basics. Understanding the market means knowing when to sell, when to pivot, when to purchase, when to raise your rent, and how to offer something unique to attract more tenants. Again, professional accountants with decades of experience and a deep understanding of the market can drastically improve your business’s profitability.
Market research is something you do only once. Keep an eye on the market both nationally and where you own property or want to invest. Check average yields, rents, new developments, crime statistics, and businesses entering and leaving the area.
If you're unfamiliar with market research, spend some time reading articles, talking to other landlords, and speaking with letting agents to figure out how to stay up-to-date with the latest statistics.
Rent collection is your main income, so consider it when considering self-management. Rent collection should be included in your business plan if you have one. If you need a business plan or if rent collection isn't included, create one or write a section about it before you do anything else.
There are several methods for collecting rent, each with advantages and disadvantages. We won't go into detail about the various techniques because they are well-documented elsewhere on the internet. You should consider electronic rent collection over cash or check collection. The benefits of electronic rent collection far outweigh the disadvantages of money or cheque collection.
In addition to how you'll collect rent, your business plan should detail how you'll:
-Check to see if the rent has been paid.
-Remind your tenant that their rent is due.
-Manage the payments.
-Keep track of rents paid and rents that are past due.
-Keep track of market rents to ensure that you are always competitive.
-Rents should be raised.
You should also define a procedure for non-payment of rent, as this will undoubtedly occur at some point. If you've already planned a strategy for dealing with non-payment of rent, you'll find it much easier to deal with when it occurs.
If you're going to a property on your own, you can complete this step. If you're already self-managing or partially managing, you've done some of this already.
The government has imposed increasing restrictions on private rental in recent years. This has been done to identify non-compliant landlords and bring more professionalism to the sector. However, it has left landlords with a plethora of industry legislation to comprehend and implement. If you've operated over time, chances are you'll have a good understanding of most of this. However, if you're new to the industry or new to management, we'd recommend getting to grips with it as soon as possible. And you can always start by taking the advice of an accountant. Book a no-obligation consultation today.
Dedicate time to learn about the rules and regulations that apply to the type of tenancy you intend to operate and the country in which you intend to work, and be aware of what is expected of you.
There are several options for accomplishing this:
-Investigate various topics on the internet. This is free and simple if you know how to use search engines to find information. It should suffice to give you a general overview. Begin with broad and vague searches; the more you read, the more jargon and industry-specific terms you'll pick up on. As you become more familiar with industry terms, you can use them to narrow your searches and find more specific and relevant information. Repeat this process until you can delve into any niche.
-Pick up a book if you want something more dependable, which will take less time. Numerous property management books on Amazon, as well as reports and white papers, will get you up to speed.
-Some short courses are available online, but we need to speak to their efficacy. We learned everything we know through experience and much reading!
The government website is an excellent resource for information. The information is usually not organised, but it's reliable, up-to-date, and accurate. The majority of the articles are simple to read and comprehend.
You don't have to use these sources in isolation; use them all. If you're a beginner, start with a good book - check Amazon reviews. At the same time, reading the book, Google any points that require clarification. If the book cites additional sources, read them. Take a short course on something you're struggling with.
Remember that anything you pay for is tax deductible if you're improving existing skills rather than learning new ones. We're not going to get into the whys and wherefores of tax deductions, so make sure you follow the rules before you deduct. It goes without saying that accountants can help you with tax deductions and help you become more tax-efficient on the long run. Contact tax-efficient accountants.
Keep an eye on the industry if you want to expand your portfolio. Keeping up with industry news entails monitoring house prices and understanding growth, demand, and decline in specific areas where you want to invest.
In general, you'll want to know what new legislation is enacting and how to prepare for it. As we previously mentioned, there is much legislation to keep up with, and it can change quickly (for instance, Coronavirus).
Setting up an RSS feed is the best way to stay updated on industry news. They may be outdated, but they are the most convenient way to keep up with the information on multiple websites at once. The good news is that many RSS readers are available for free. We like Feedspot, and the free plan provides us with everything we need to stay on top of industry developments. Each RSS reader is different, but you usually enter the URLs of the websites you want to follow. The RSS feed will send you an email daily with the latest articles from each site on your list. You can go through this list every day, and if you see anything interesting, you can click through from your email to read the post. It is the simplest way to stay on top of everything, and it only requires some preliminary work to identify the best sites to monitor. You can also subscribe to our monthly email newsletter, where we share the most important industry updates and tax tips.
The success test will help you know how well your business is doing and what you can do to improve its performance. This test was developed by Elena, our CEO, in her book: Rewire Your Business for Success.
Get in touch with us to learn more about how we can help you:
Book a discovery call to speak to our CEO or lead accountant at Elena Meskhi & Co.
Purchase our accounting services straight from our website.
Contact us for any business enquiries or consultations.
