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Acting as a landlord can be incredibly profitable at times. However, sometimes a property can be at risk of losing money. 

How can you lose money on rental property?

You can accumulate a rental loss if you spend more on property expenses than the property provides as an income.. For example, if you’ve earned £25,000 in rental income and spent £30,000 on property expenses, you’ll have a rental loss of £5,000.

If this is the outcome of a property’s first year, where renovation and maintenance were essential, this is an understandable consequence. However, it should be a priority to keep rental loss costs down, especially moving forward with renting! Here’s how…

How to prevent losing money on investment property

1. Don’t pay too much for the property

If you pay too much for your property, you’ll suffer the consequences as you let it out. The mortgage may be too expensive, and renovations may cost you an unexpected amount. It’s important to know the market, know what you’re buying, and know if the cost is worth it. Always do your research, and don’t just go for the first property you find!

2. Take advice from professionals

Whether you’re using a letting agent or privately handling your rental property, it’s experienced individuals that can provide the best advice on rental properties. Professionals know the ins and outs of everything to do with the rental scene so it would be unhelpful not to listen to them!

Real estate investors, estate management companies, or hiring property managers are all reliable sources of information.

3. Consider the value of the property

When it comes to selling the property, it’s important that it is desirable to other buyers. Ensuring that the property is in an area with high demand for houses or rental properties is important. Considering whether there are schools, shops, and transport services in the area will also benefit its ability to attract buyers.

Even if you’re not selling the property, these factors are important to consider for rental properties. It will make it easier to find a wide range of tenants to choose from because people will want to live in your property!

4. Set the right rental price

It’s important that you’re charging your tenants the appropriate amount of money for what they’re getting. It might be that you can charge more for the area and property they’re in! Reconsidering your rent charges could minimise rental losses when you have to expense property-related things, such as new insulation. 

5. Solve maintenance problems early

If your property is susceptible to maintenance issues, the sooner they’re fixed, the less they’ll cost. This will also keep your tenant happy if you stay on top of repairs. 

To prevent costs entirely, regular maintenance and checks of gas, electric, and water supplies, as well as interior and exterior walls, can ensure that significant works are repaired before they cause damage to the property.

6. Screen tenants

Tenants can cause a lot of trouble regarding money. They might pay their monthly rent late, or find themselves in rent arrears. Unfortunately, any tenant can end up in this situation. But, tenant screening and asking for tenant references can help minimise the chance of housing ‘bad tenants’.

This could save you money in legal expenses (if you have to file for eviction) and damage repairs (if the tenant damages the property).

7. Stay organised

Keeping track of the money you’re spending on your property can help prevent overspending. It can help you find ways to reduce property costs or find areas where you could save money.

This could include shopping around to find the most affordable insurance and contractors for maintenance.

8. Invest in landlord insurance

Landlord insurance includes a wide range of policies appropriate for landlords with rental properties. From building and contents insurance, to Rent Guarantee insurance and home emergency cover, landlord insurance can cover legal fees and damage costs, and protect your rental income. 

If you’re a landlord who wants peace of mind, landlord insurance can give you that. Rest assured that you won’t lose money because LetsInsure can insure it for you.

How LetsInsure Can Help

LetsInsure is an experienced provider of Rent Guarantee Insurance, Home Emergency Assistance, and Deposit Replacement Insurance for landlords of rental properties. We offer personalised protection and compliance with professionalism and specific attention to detail.

If you want peace of mind, knowing that your property is appropriately and affordably insured, LetsInsure is here to help. We’re here to ensure that your money is protected.

You can sign up to our services for free or contact us with any questions you may have and we will be more than happy to help!