Beware Poor Property Management

It is undeniable that property letting can produce positive returns if handled correctly; however following the recent influx of accidental landlords onto the property market, many are now witnessing negative profits due to poor management by estate agents.

According to recent studies, some inexperienced property investors are now experiencing the harsh realities of having leased their rental properties to poor tenants who have done extensive damage to their property.

In fact, many have reported maintenance costs of up to £1,900, after tenants left their properties in such poor repair that they had to pay cleaners to come and clean their carpets, walls and gardens.
More worryingly about this study, was the revelation that these property investors were paying estate agents a monthly commission to help manage their properties.

Yet as this survey clearly proves, a large proportion of them were not doing their jobs properly, instead allowing tenants with a poor reputation to occupy their homes.

Luckily such costs can easily be covered by utilising the deposit put down by tenants at the beginning of their Tenancy agreement. However, as this study went on to divulge there have been instances where rental agents have returned deposits to tenants without properly inspecting the property first.

With such a growing bad reputation it is easy to see why more and more property investors are choosing to manage their properties themselves.

From picking a tenant to arranging an assured shorthold tenancy agreement to inspecting the property prior to tenants vacating it, with a little initiative investors can prevent such instances - as listed above - from ever occurring.

More than a million people aged over 50 are believed to be relying on increasing property values to help fund their retirement. Yet since the onset of the recession during autumn 2007 an estimated £27,250 is believed to have been wiped off the price of UK property values.

Even following the last 7 months which has witnessed property price increases of £15,000, this overall  property loss has still severely dented pre-retirees plans to use equity release to boost their retirement.

According to popular insurance company Liverpool Victoria, more than 12% of over 50s believed so much in the capital growth of their properties that they have chosen to save less independently.

And as a consequence, many now face a reduced standard of living when they hit retirement..

Yet despite these property price falls, confidence still remains in the long term value of their properties.

Through the use of equity release - where money is taken from the value of their properties – many over 50’s plan to fund their retirement by taking money out of their properties.

However, consumer group Which? feels this could be a big mistake and should only be used as a last resort.

Expensive, inflexible, and more often than not designed to leave people with little equity to play with; property experts recommend downsizing to a smaller, cheaper property instead. Not only is downsizing easier but pre-retirees can instantly benefit from these profits.

Original Article

More About the Author

Fraser Stirling, Property Mentor Delegate

No matter what the media wants you to believe, property is still the only investment route where you can benefit from an asset that will NEVER go into zero value. Even when I was university I admired properties ability to withstand the economic elements and stay strong, even when other investment forms faltered or failed. X years on, I am now the proud owner of multiple property investments - one of which earns a passive income of £4,680 and my property portfolio is still expanding. Read more