Landlord Products / Services
“I want in”, he says, with a smile stretching from ear-to-toe, so smug that it makes me want to launch a bowl of warm piss over his face.
A friend of mine has managed to stack together a little too much cash under his withered mattress, and now he wants to taste the sweet nectar of landlord living.
But is it actually worth being a landlord today in [insert desired year, because this blog post will be timeless]?
The reality is, being a landlord is one of those professions that mostly looks glamorous from the outside… and exponentially hideous from the inside, and that’s precisely what I told him.
Once you’re in the game, the anti-climax will rapidly hit you square on the jaw like a tonne of used tampons. It’s like, finally hooking up with that one person you’ve been pining over for years (the one that never gave you the time of day), only for the sex to be bitterly disappointing; nothing fits quite right and you encounter soul-destroying blemishes in places you fantasized being flawless.
Welcome back to planet earth.
Is now a good time to invest in BTL rental property and become a landlord (timeless advice!)?
Before I cover the pitfalls of being a landlord, I’m going to quickly address the most frequently asked questions:
- Is it even worth becoming a landlord today?
- Can we really “time the market”?
- Is now the best time to invest in rental property?
What’s actually being asked is, “can I still line my pockets with cheese by being a landlord, even though property prices are freaking out of control and running expenses are diabolically evil?”
Fair warning, if you’re looking for a “yes” or “no” answer, you’re going to be sorely disappointed. However, perhaps you’re willing to endure some rational insight instead.
I’m writing this [update] in the midst of the Coronavirus pandemic (2020), because it’s made for a good opportunity to share my fundamental thoughts on “timing the market”
No matter what is happening in this world today, whether there’s an industrial revolution or a killer viral infection on the loose, there will be industry sectors that are booming and sinking. As it so happens, the property market is highly anticipated to take a hefty kick in the nuts in the coming months due to the coronavirus (it’s not quite happened yet), so the vultures are circling in preparation. You might even be one of them.
Those that are fortunate enough to be sitting on excess cash reserves are pondering whether now is the perfect opportunity to invest in property, while the global economy is burning to the ground in front of our very eyes.
The truth is, my thoughts on investing in rental property is always the same. The whole coronavirus pandemic is a [tragic] variable in the current equation, but it certainly hasn’t interfered with my approach to investing in the rental market.
Yes, it’s possible to take advantage of a declining market. But I don’t consider that a necessary strategy, but I do believe focusing on the bigger picture will serve you better.
So what’s the bigger picture then? Good question.
First, let me clarify, I’ve never tried to time the market. I’ve never actively waited for a downturn or a global pandemic to take advantage of simmering prices (don’t get it twisted, though. I’m not saying I never take advantage of a choking market, I’m just saying I’ve never waited for it to happen before investing).
If you’ve invested sensibly, history says investing in property for the long-term will not fail as an investment.
Case in point, I purchased my first two rental properties back in 2007, right at the peak of the previous property cycle, literally months before the entire global economy went to shit, particularly the property market.
Long story short, I was 30% down on my investment soon after investing. That hurt. Hard.
Fast forward 10 years, the economy inevitably recovered and I have more more than doubled my investment.
What is the most fundamental aspect of property from an investment viewpoint? There will always be demand for it. You cannot say the same for precious metals, stocks, crypto etc. That should be comforting for every landlord, even during the darkest of times.
That is precisely why I consider property the most reliable and secure long-term investment, and that’s why I believe it will “worth it” any day of the week. Well, short of an apocalypse.
it’s extremely difficult to time the market, and experience has taught me that it’s statistically a losing battle, because most people just end up waiting on the side-lines and end up missing the best opportunities. And those that do time it right – more often than not – just got damn lucky. For that reason, I believe time spent on trying to, err… “calculate” when the market has bottomed out is both futile and unnecessary.
I have found that there are ALWAYS good investments available that will produce mouth-watering yields, particularly for medium to long-term investments. Moreover, someone is always looking to sell below market value, and property prices have so far always increased over time. With that in mind, I don’t think there’s ever a bad time to invest in rental property, but there’s good and bad deals at any one time.
Make of that what you will.
What you should know before becoming a landlord…
Take it from an average landlord that’s been scratching around in the game for several years, being a landlord is actually hard work and it can be extremely exasperating, even for an energetic playboy such as myself. Not consistently hard, but periodically. But those periods are some of the worst I’ve experienced in a professional capacity, and believe me when I say they come around far too quickly. The money definitely doesn’t come easy, and there are easier ways of making a lucrative living that’s attached with far less stress.
On a side note, screw those people that tell landlords to “get a real job”
I’m one of those chumps that got suckered into the game after watching one too many episodes of Sarah Beeny’s Property Ladder. If you remember the programme, you’ll recollect how excruciatingly painful it was watching the world’s biggest idiots making a killing from their restoration projects. To me, that made property seem like a viable option. If they can do it, I certainly can. Probably.
I didn’t have the time or testosterone to develop, so buying properties in ready-to-let condition seemed like the natural and easiest entry point.
In hindsight, as much as I loved Property Ladder and Sarah Beeny, it really shouldn’t be the sole reason for inspiring anyone to enter the property profession, because the truth is, most of the series was filmed during a booming market, so most of the participants could have purchased properties, sat on their arses getting blitzed off their tits on crystal meth for several months, and still made a killing.
But at the time, it looked fabulously easy. And there lays the problem, being a landlord just looks too damn easy. How difficult is it to put down a deposit and then get a conveyor belt of 9-to-5 sweatshop monkeys paying off the mortgage over the course of 20 odd years? We’re really onto something here. Rinse and repeat. Easy.
However, from my experience, the following pitfalls hold true…
1) The industry is polluted with degenerate assholes
I’m not just talking about letting agents here, although they seem like the obvious target. We all know what they’re capable of- everything you’ve heard about them is true. They’re mostly a bunch of unscrupulous tossors that create imaginative ways of swindling money out of landlords and tenants (those of you agents that read my blog are OK though, I swear! You guys are slick!).
But agents can’t take the entire blame (only the majority) for the state of the industry, otherwise eradicating them from our cycle would make it the perfect profession.
The bigger picture is somewhat more terrifying, and that’s because every level has an asshole waiting to suck the life out of you. Literally, every level, from the bottom all the way to the glitzy top, whether that be cowboy tradesmen, out-of-touch asshole politicians introducing ridiculous laws on a whim, or tenants that feed off ruining the lives of innocent landlords knowing full well they can get away with it, thanks to those… ridiculous laws.
A good example is the tenancy deposit scheme, because it comes attached with bullshit laws/penalties that unconscionable tenants take advantage of. Many dip-shit tenants needlessly prosecute/threaten decent landlords to make an extra buck just because their deposit wasn’t protected. It’s shameless. The landlord SHOULD have protected the deposit, yes, but prosecuting for the sake of profiting even though they’ve been a good landlord is an asshole move.
The industry is just contaminated and it’s extremely difficult to entirely avoid collision.
Why is this different to any other industry? In principle, it’s not, but ploughing money into property is probably one of the biggest investments you’ll ever make, so it’s considerably more painful when someone tries to fuck with that.
2) It’s NOT a get rich quick scheme
The average property investor won’t get rich from being a landlord, they’ll most likely secure a cosy pension and make a comfortable living by the end of the cycle if they’ve been relatively successful. But even reaching that stage is a slow grind. Very slow.
People seem to have this warped perception of how it all works. Let me assure you, it’s rarely a case of dabbling in the market for a few years and cashing out with a couple of million and a dangerously attractive gold-digging stripper g/f that’s jam packed with syphilis (basic rule, the more STDs they’re riddled with, the more attractive they are).
The average rental return typically isn’t that great, you’ll be lucky to achieve a 7% yield, so you’re not really making any real money for the first decade. You may even buy and sell at the right time, but that definitely won’t happen overnight.
However, while it may not be a get rich scheme for most, being a landlord can be an extremely reliable investment vehicle which is efficient at turning a profit and fighting inflation.
3) Research is boring, but essential
I hate researching. Always have, always will. If you’re relatively normal/cool, you feel the same as I do.
Off the top of my head, I can’t think of anything that can knock it off the top spot for being the most tedious shit on the planet. I really don’t have the patience for it. Much like Golf. Don’t even get me started.
But as much as I despise it, I know sometimes research is simply not optional.
Unfortunately, far too many douchebags jump into this industry penis first without doing any of the essential groundwork, which of course, is totally psychotic, no matter how much you hate the idea of cracking open a book and soaking up knowledge.
Every day I hear at least one landlord say, “I didn’t have a clue about the tenancy deposit scheme, and now my tenant wants to sue me. What can I do?”
That only tells me one thing. That landlord refrained from getting off their fat, crusty ass to do even the most basic of research before spending tens of thousands of pounds.
If you can’t even be bothered to do your own independent research to support your investment, then you’re a loaded weapon. You’ll most likely be a liability to yourself and your tenants.
You’ll need to do a pile of research before spending a penny, and then continue to keep your ear to the ground because new nonsensical laws are regularly being introduced.
4) It’s NOT passive income!
“You’re making money in your sleep”, they say.
Yeah, I’m really not. Being a landlord really isn’t that passive, despite popular belief.
When you’re dealing with bastard tenants in rent arrears, spending late nights cleaning thick, congealed shit off the kitchen units with a toothbrush, resolving continuous maintenance issues, and spending long weekends painting and decorating in-between tenancies, you then realise how actively you’re working for every penny, which goes against the very nature of passive income.
I don’t have products flying off the shelves while I’m sleeping. I have adult-shaped children living in my property that need maintaining and servicing all year round. Being a landlord is a 24/7 gig and your services could be required at any moment.
Tenants WILL regularly want repairs that will require your attention, and they’ll often ruin your day with bullshit minuscule maintenance issues like a loose door handle. They COULD remedy the issue themselves within minutes, but they won’t. They would rather play Satan and torture the landlord because that’s just easier for them.
Unfortunately, the more properties you buy, the less passive it becomes (up to a certain point).
5) Continuous investment
One of the reasons that BTL isn’t a get rich scheme is because it’s like every other business- there are continuous outgoings, many of which are unexpected. Being a landlord is literally a money-pit; it’s often expensive as hell, and forecasting costs is incredibly difficult so you can’t even prepare for it. You will continually have to throw money at problems, mainly repairs and maintenance issues.
I was recently browsing through a landlord forum, where I read a thread by an aspiring dip-shit landlord that was the epitome of ill-prepared. She was forecasting the figures for her prospective investment. I honestly couldn’t tell if she was asking for opinions or just gloating.
The figures she provided looked amazing, but her projections were horrendously flawed. The only expense she accounted for was her mortgage payments. She didn’t take into consideration the cost for complying with legal requirements, insurance, tenant acquisition, maintenance, tax, marketing, and the shit load of other expenses that come with being a landlord. Unfortunately, she posted her comment in a rather hostile environment, so she soon got yanked back down to earth by the scruff of her neck. Poor girl. Stupid as hell, but still a sad way to go.
If my outgoings were limited to my mortgage payments, rest assured, I’d only be blogging selfies next to my Lambo with my middle fingers grinding against the camera lens. Alas, a landlord that is only restrained by mortgage repayments is either lying through their teeth or unbelievably reckless at their job. An asshole, either way.
It’s a business that requires continuous investment and rightly so, because you’re dealing with tenants that expect a service.
6) Incomprehensible laws
I can’t say I’m familiar with many sector specific laws, but I’m going to go out on a limb and say that landlord law is probably the dumbest shit out of them all.
To sum up the state of the system: good landlords with bad tenants don’t stand a chance. They really don’t, they’re cannon fodder. We’re basically paralyzed from exercising any resistance when tenants screw us over.
To put it into perspective (most of you will already know this), a tenant in arrears cannot be served a valid eviction notice until they are 2 months in arrears. Once an eviction notice is served and then ignored by the tenant, the landlord will have to sit back and anxiously wait for a court hearing. The hearing could take up to several months depending on how busy the courts are (they’re usually filled to the brim). In the meantime, the tenant is kicking-back rent free for the entire duration.
The landlord cannot even attempt to enter the property because that could be deemed as harassment, as would sending aggressive text messages (which is something we would all, of course, naturally want to do e.g. “get the hell out of my property, you freeloading, dippy bastard, or I’ll put your head into a meat grinder and feed you to the crows”).
The reality is, you’ll have the urge to smash the door down with a sledgehammer, threaten to burn the living shit out of your tenant with a blow torch unless he/she moves out immediately, and then change the locks. Unfortunately, unless you want to get severely prosecuted, that fantasy will forever remain in the spank-bank.
That’s just one example. The sad reality of how long landlords have to wait for justice to prevail makes me want to puke my guts out. To make matters worse, tenants falling into rent arrears and dragging their heels is incredibly common, it happens on a daily basis.
The collective group of assholes that designed and approved such injustice deserves the Ray Rice treatment. Did you all read about that? Oh man, that shit was messed up. Ray is a professional American football player who punched his fiancée square in the face, knocking her out cold while they were in a lift. It was all caught on camera. He then dragged her lifeless corpse out of the lift and… actually I don’t know what happened next. I guess she woke up and went home. But punching these assholes in the face by a team of professional American footballers seems appropriate, innit?
7) Something will go wrong
There’s no such thing as smooth sailing around here. Sooner or later you’re going to get screwed over and you’re going to feel like your world is falling apart. You’ll then probably question whether or not it’s all worth it.
The culprit could be a broken boiler that’s going to set you back a few thousand pounds (which you really can’t afford) or perhaps a shyster letting agent that deceivingly milked you for every penny, or most frighteningly, a tenant that doesn’t want to play ball.
You won’t know what to do, you’ll frantically research online and read similar horror stories on various forums, and then you’ll feel worse, shrivel into a ball and worry yourself to sleep. Unfortunately, most problems end up hitting you where it hurts most: your pocket. It’s generally quite a painful experience, like getting drop-kicked in the nuts.
On a side note, researching online is a double edged sword. It can make you wiser and feel more empowered, but it will often unnecessarily scare the shit out of you. I stopped diagnosing medical concerns online years ago, because everything pretty much led back to cancer or an incurable STD that would see the demise of my penis.
The primary problem with being a landlord is that you’re ALWAYS relying on other people not to be idiots, and that makes you extremely vulnerable, because people are generally idiots. But essentially, no one is going to value your possessions as much as you do.
8) It’s ALL on you
It doesn’t matter whether you use a letting agent or your mum to run your affairs, because if anything remotely inconvenient occurs, the responsibility will ALWAYS navigate its way back to its rightful owner. The burden is permanently fastened to your ass like a cluster of haemorrhoids.
I don’t know if it’s down to genius marketing, deception or just pure stupidity (perhaps a combination of all three), but many landlords think they can pass their responsibilities onto a letting agent and void all accountability. Unfortunately, that’s not going to happen, not even if that’s how the agent packaged and sold the deal.
A letting agent is NOT going to stay awake at night chewing their nails off, worrying about your tenant’s spiralling rent arrears issue. It would be nice if they did just to prove they’re not entirely soulless, but they won’t. They’ll probably just rub their greasy mitts together and use it as an opportunity to up-sell their eviction services. You’re the one that’s going to worry and pay through your nose to get the situation repaired, no one else.
Similarly, if you fail to meet your landlord legal requirements, who do you think is going to get persecuted? Your agent? That would be super cute. But no. You.
9) Booms and busts
The natural cycle of every economy experiences growth and contraction. Booms and busts.
That means your property could be worth 100k today and 70k by the time you get woken up by your morning wood poking you in the eye. That could also mean negative equity for you, and once you’re wedged into that hell hole it’s often tough getting out alive unless you have disposable income, which leads back to throwing money at the problem.
The last bust in the UK occurred in 2007, but since then the market has recovered. However, some experts are anticipating another one closing in soon. So what does that mean for landlords? It means you can’t always start/stop playing the game when you choose- some times you either get aggressively thrown out by the teeth or you ride it out until the coast is clear.
Is becoming a landlord even worth it?
Yes. One hundred percent yes.
Play by the rules, be sensible, and you’ll make it through with good fortune.
Over to you. What do you think aspiring landlords should know?
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.
Good article.
"What do you think aspiring landlords should know?"
The way out.
Capital Gains Tax.