Building Houses for Renting: What You Need to Consider

Building Houses for Renting: What You Need to Consider

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The rental property market is very large in the UK. With a vast network of landlords, it may come as a surprise to know that most of them operate just 1-4 properties, which means they aren’t massive rental companies. Almost half of all landlords only have one property for rental. These are the kinds of statistics that make it appealing to the average person who is considering becoming a landlord.

If you’ve decided this is a path you wish to pursue but want to build a house to rent it out, then there is plenty to consider. Let’s take a closer look.

Location Matters for Rental Properties

There are lots of important considerations when building a house for rent but few compare to the importance of location. It’s the cardinal rule for real estate in general – it’s all about location, location, location. You need to choose an area that will be desirable to tenants so that you can rent out the property quickly and easily. You also want to choose a location that will appreciate so you have peace of mind knowing you made a sound investment.

Finding the right piece of land can be a trying task. Not only should it be a great location but it needs to be within the budget, zoning requirements must be considered, and ideally, the land is ready to start building right away.

A topographical survey is wise before any construction starts. You can check out the survey options from Arbtech, which includes a topographical survey. This provides a complete picture both of the actual site and the near-site land features such as the boundaries, service cover positions, trees, tree positions, ditches, existing buildings, walkways, drainage and more. The more information you gather, the more prepared you’ll be to make a wise decision.

What’s the Total Budget for the Build?

Speaking of the budget, there’s a lot more than just the land you need to include in it. What is the total budget for your build? What are you comfortable paying? It’s also a good idea to build an emergency fund in the budget, as a surprise can happen that results in overages. Having that extra cash put aside means you’ll still be able to remain on budget.

Some of the other costs can include:

  • The land

  • Architect’s fees

  • Builder and contractor fees

  • Materials

  • Landscaping

  • Finishes

Setting the budget should also take into account how you plan to come up with the finances. Do you have the cash to fund the project or will you be borrowing the money from a lender? Will this be a solo venture or do you plan to have an investment partner?

What Size House Do You Want to Build?

Here’s an area where landlords can fall into a trap, so it’s important to consider everything. The size of the house needs to be dependent on several factors that include the plot of land and how big of a home it allows, the budget, who your target tenant market is (singles, couples or families) and what makes sense in that particular neighbourhood or area.

Bigger is not always better, especially nowadays when so many people are looking to downsize and bring down the cost of living.

Consider the Timeline – Can You Speed It Up?

Every month, week and day that you spend building is one less day that the property is making you money. It’s a fact that landlords are very aware of and it’s usually a driving force during the build process. This means the big question is, what’s the timeline for the build and are there ways to speed it up?

Every build will encounter challenges. The hope is that they are small and easy to fix, affecting the timeline very minimally. But what about the bigger issues? Do you have a plan for dealing with them? Can you save time in other areas to make up for it?

In today’s climate, supply chains are constrained in ways that are affecting just about every industry. The construction industry is no exception and can affect your ability to source and receive materials in a timely fashion. If you run into this issue you’ll be faced with waiting longer for materials to arrive, or you may need to go with plan B and pick something else.

Make Sure the Interior Design Appeals to Renters

A common mistake first-time landlords make is focusing on what they would want to see in terms of interior design and décor rather than what tenants want to see. Remember, your property may be viewed by many people before you find a tenant, and it needs to be universally appealing. This means veering away from current trends and sticking to the basics that appeal to everyone.

Expert designers often recommend you choose a neutral colour palette that allows potential renters to envision themselves, their furniture and their décor in the space. Providing them with a pleasing yet blank canvas should be the goal. Neutral colours also help to make the space appear bigger, brighter, cleaner and more welcoming.

If you decide you want to include furniture and décor that you include in the rental fee, again, you want to keep things neutral and basic. Tenants can add their pops of colour and personality once they move in.

Is This Just the Start for You?

If you’re starting with just one property, you may also want to ask yourself if you plan to take this dream further. How invested do you want to be in property management? Starting with one house is usually wise as it will be manageable. The more properties you add to your portfolio, the more confusing and time-consuming things will get.

Building a Rental House Can Be Extremely Exciting and Profitable

If you’re a bit of a risk taker and you’re looking for an exciting and hopefully profitable venture to enter, then building a rental house could be a great option. Just be sure to approach the project logically, asking plenty of questions along the way, and be prepared to make those cutthroat decisions.

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