Top Tips to Move From Part-Time to Full-Time Landlord
Becoming a landlord often means handling your property (or properties) in addition to holding down your regular 9-5 job. However, if your landlord responsibilities grow (e.g by acquiring more properties), juggling these two careers can start to become unmanageable.
Eventually, it may be the right time for you to ditch your day job and switch to being a full-time landlord. However, this transition isn’t as easy as it sounds. Although you’ll be completing many of the same day-to-day tasks, being a full-time landlord is a very different experience from only doing this part-time.
Therefore, if you want to achieve success as a full-time landlord, you need to know how to transition into this role effectively. Keep on reading to discover exactly how you can switch from part-time to full-time landlord.
1) Build up your savings
As a part-time landlord with a salaried 9-5 job, you have much more financial stability. Even if your property business isn’t going so well, you still have a regular salary to rely on to pay your bills and mortgage.
Quitting your day job to focus on your property investments completely changes your financial situation. On one hand, you have much more time to invest in your landlord business to make it successful, but on the other hand, you don’t have the safety net of a 9-5 job if things don’t go as well as you thought they would.
Therefore, you must build up your savings before you take the plunge and quit your main job. Try to build up around six months’ worth of savings to cover bills and mortgage payments if, for example, you can’t find tenants or your current tenants start missing rent payments.
2) Consider your property portfolio
In addition to building up your savings, you should also consider your property portfolio before you transition to working as a full-time landlord. Often, you may need to add more properties to your portfolio to make your business viable.
However, buying more properties isn’t the only option. Instead, you could choose to focus on a smaller number of high-end properties to bring in enough income. This also allows you to focus on a particular niche in the rental market, which can build your skills and reputation.
Conversely, you could diversify your property portfolio instead of focusing on a niche. Having a wide range of properties will protect you from financial trouble if one type of property suddenly becomes less popular and loses value.
If you’re not sure what to do with your property portfolio, remember you can ask for advice from landlord associations and online forums.
3) Decide if you want to set up a limited company
Once you become a full-time landlord, you can decide whether you want to operate as a sole trader or set up a limited company for your business. This will affect how you pay taxes.
If you operate as a sole trader, you’ll have to pay income tax on all the profits you make. At the moment, you pay income tax by filing a Self Assessment tax return, but after April 2024, landlords and sole traders with an annual income of over £10,000 will have to use compatible software to keep financial records, send quarterly updates to HMRC and declare their income. This initiative is called Making Tax Digital for Income Tax.
However, you may prefer to set up a limited company for your landlord business. In this scenario, you would pay corporation tax on your business’s profits and then pay income tax through PAYE (Pay As You Earn) on your wage. Depending on your turnover, you may have to register for VAT and file a VAT return too.
Either option could work well depending on your circumstances and your plans for the future. Speak to a financial advisor or accountant to figure out the best choice for you.
4) Write a business plan
If you’re going full-time as a landlord, you need to get serious about your property investment business. To achieve success, you need to write a business plan and think hard about what your goals are.
In your business plan, you need to describe the aims and values of your business (mission statement), your long- and short-term goals, your timeframe and strategies for achieving these goals, and your financial forecast. Within this business plan, you should also discuss your plans for your property portfolio. For example, you should state if and when you will expand this portfolio and if you want to sell the properties and retire by a particular date.
Not only will a business plan help you set clear goals, but it will also potentially help you get approved for buy-to-let mortgages when you’re expanding your property portfolio. As such, writing a business plan is an essential step in your transition from part-time landlord to full-time landlord.
5) Research the rental market
Having an in-depth understanding of rental markets is important for any landlord, but when this becomes your full-time career, you need to be aware of current market trends so you can make the best investment choices. This will help you stay in a strong financial position.
By regularly checking rents and what’s on the market in your area, you can set reasonable rents for your properties and know the best times to acquire new homes for your portfolio. Additionally, you should look at trends in other locations to see if it’s a good idea to diversify your portfolio by buying properties in different neighbourhoods.
6) Set up an office space
As a part-time landlord, you may have just worked as and when you could around your main career. However, this lack of structure won’t cut it when being a landlord is your full-time job.
Since you’ll be working for yourself, you may find it difficult to set clear habits such as daily or weekly working hours. One solution is to have an office space within your home that’s completely dedicated to your business. Having this space will help you focus by creating a clear divide between work areas and personal areas.
If you’re struggling for office space within your home, you could find co-working spaces in your local area. These office spaces often have a subscription fee, so you can either set aside a budget for renting this space or find a local library or café to work from instead.
7) Be more organised
It’s also hard to be organised and disciplined when you’re self-employed. This issue could be holding you back as a landlord and preventing you from reaching your full potential.
Within your office space, make sure you have a sensible filing system to help you keep track of your documents. For example, you’ll need move-in and move-out checklists, tenancy agreements, health and safety information, contact details for each tenant and for contractors (e.g., electricians and plumbers), and all of the relevant legal documents for your properties. It’s a good idea to have a separate file for each property so you can easily find what you need.
To keep your documents safe, you should consider keeping digital copies in addition to physical ones. By storing your documents securely in a cloud-based storage service, you’ll have access to them via any device, and should you lose any of your paper documents, you’ll always have digital copies as a backup.
8) Build a network of contractors
Dealing with maintenance issues and upgrades will be one of your main responsibilities. To be a great landlord, you should always strive to solve your tenants’ maintenance problems as quickly as possible.
If you’re a full-time landlord with a large property portfolio, you’ll probably have to handle repairs pretty often. As such, it’s a sensible idea to build a network of contractors in your local area that you can trust to get the job done well. For example, you should know at least a couple of electricians, plumbers, roofers, masons, carpenters and cleaners so you always have someone to call when an issue arises.
9) Learn about marketing
Why would a landlord need to develop their marketing skills? In fact, learning about marketing can be extremely beneficial for your full-time landlord career.
If you have an empty property, you need to find the right tenants as quickly as possible so you can secure an income. Therefore, learning about how to market properties effectively can have a significant impact on your profits.
If you’re completely new to marketing, you can find plenty of fantastic resources online, or you could even set aside some money to purchase an online course and improve your skills. However, if this doesn’t fit into your busy schedule, you could decide to use a letting agent or property management company to market your property/properties for you.
10) Screen potential tenants
Screening tenants is a necessity for any landlord, but if you fully rely on your rental income, then you want to make sure that all tenants will pay the rent on time and not cause damage. Without proper checks before a tenancy agreement is signed, you could find yourself dealing with bad tenants, or in the worst-case scenario, going through the eviction process.
During tenant screening, you need to check the potential tenant’s income, credit history, references from previous landlords and their right to rent in the UK. Checking their right to rent is particularly important because it’s your legal responsibility as a landlord.
If you’re already using a letting agent to market your properties, then why not also let them take care of your tenant screening process? For a let-only service, which includes the letting agent marketing the property, finding tenants, collecting deposits and conducting tenant screening, you can expect to pay a one-off fee of around £300-£600.
Becoming a Full-Time Landlord
Replacing your 9-5 job with a career as a full-time landlord can seem like a leap of faith, but as long as you take adequate steps to prepare yourself, you can turn this new venture into a huge success.
If you’re ever feeling overwhelmed, remember to look into letting agents, property management companies and property management software for additional support. Letting agents and property management companies will typically charge fees of around 10% or 15% of the rent to fully manage a property, and if you want access to property management software, your monthly payments will vary greatly depending on how many features are included.