Simon Thompson, director of Accommodationforstudents.com, offers some essential advice.

1. Do your research first

Many prospective student landlords see the pound signs clocking up, but often fail to see the downsides of running a property business. A property business is just that – a business. All the general rules of running and marketing a business apply to student landlords as much as they do any other business. The key to a successful business is understanding your customers and providing them with the right products and services at a reasonable price. Student letting is about providing decent property in the right location at the right rent.

Running a successful student letting business offers no easy way to riches. Student landlords work long hours sourcing, renovating and maintaining their property. After hours, someone needs to keep up with ever-changing letting laws and complete the accounts and tax returns.

Before buying a property, every prospective student landlord should sit down and make some tough decisions – the first two are where to invest and who will take on the day-to-day management of the rental business.

2. Pick the right property

Student lets is a growing market which has attracted many investors who have recognised it as an opportunity that can deliver yields of up to 10%, far greater than other property type. However, sourcing student property can go against the grain for property investors who do not realise the needs of their market. Students like to share in groups of generally three or more. The ideal student let sleeps at least three people, which puts many standard homes with three bedrooms in the frame. However, with the profitability of a student let determined by the number of bed spaces, larger Houses in Multiple Occupation (HMOs) which benefit from multiple rents, can often seem like the most attractive option.

Property investors need to bear in mind financial considerations such as buying a property that will appreciate in value over time and that is the right type of home in the right location. Investors need to weigh up their options and calculate the potential rental yield, rent cover and loan-to-value to establish whether a property is worth pursuing.

3. Keep good financial records

A landlord also has a legal obligation to keep good financial records and to declare any profits to the tax man. Keeping good financial records from the start of a property business is vital. Failing
to keep track of income and expenses is likely to lead to paperwork spiralling out of control. Landlords can also face unnecessary fines and penalties for failing to keep good business records and making mistakes on tax returns. Worst of all, poor records can lead to paying too little or too much tax.

For individuals, the options are sole purchaser, buying as joint tenants or tenants in common. When considering the best tax-effective ownership for a property, always look at the bigger picture and how your decision will impact other tax issues.

4. Get ready for rental

Most landlords, especially those running houses in multiple occupation (HMOs), have lists of basic tasks they have to consider. Some of the most important include:-
Timing – student lets revolve around their own calendar and the academic year, which runs from September through to July. The peak viewing times are January to March.
Insurance – ensure you have sufficient buildings, contents and landlord insurance.
Get Accredited – Accreditation schemes aim to let landlords demonstrate that their properties comply with legal standards and that they operate good management practices.
Finish & Furnishings -The starting point for a student let is figuring out what a student wants from their home and simply giving it to them.
Get an Inventory – Make sure you get an inventory report to avoid any disputes at the end of the tenancy term: positive referrals and reputation are very important.
Screen your tenants – Screen your tenants and make sure all the paperwork is in place. Take time to explain everything carefully. Let tenants know the procedure for reporting maintenance issues.

5. Keep the tenants happy and the rent rolling in

A landlord’s work is never done and certainly does not stop when the tenants move in – and like most things, tasks expand to fill the time available. Unless you have an effective tenant management system, you will find yourself rushing around dealing with complaints, sorting out repairs and chasing rents. This is all part of running a property business and should be expected. Respect your tenants and they will respect you.
You can also decrease the chances of tenants sliding into arrears by setting out a rent policy and by firmly enforcing the rules. Trying to tie rent days with pay days can be a good idea.

6. A bonus tip!

Take your tenants for a beer! A good open relationship from the start can make all the difference.