‘Our properties make £60,000 a year – but we’re too busy to manage them’
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In the aftermath of the financial crisis, Ashley Wong and her husband Alan Walton decided to invest in rental properties to provide income in case they lost their day jobs.
They were both working in financial services and feared they could get caught up in the waves of redundancies taking place.
Since they bought their first buy-to-let property in 2014, the couple have built up a portfolio of nine properties that produces a net income of about £60,000 a year.
To sustain the business alongside their full-time jobs, they have relied on letting agents to fully manage their properties.
Like many landlords, they started out close to home, choosing a rental in London, which is where they are based.
Ms Wong, 49, and Mr Walton, 55, soon realised the margins were thin in London, so ventured further afield to find cheaper properties. First it was Milton Keynes, then when the area got more expensive they opted for Northampton, then Nottingham, then Burton-on-Trent.
“We just keep moving wherever the numbers will work for us,” Ms Wong said.
They’ve used a mix of savings and refinancing to expand their portfolios, cashing in on rising property prices.
To protect themselves from recently rising interest rates, they’ve overpaid on their mortgages.
“Rents have been going up a lot – that also helps,” said Ms Wong.
Their portfolio is scattered across different places to help diversify their investments.
What to look for in a letting agent
To find the right letting agent to manage their homes, they often start by looking on social media for investors in the area and reaching out to them to ask for recommendations.
Ms Wong said she also checks Rightmove to see how many properties the agent manages in that location, and contacts the ones she finds operating in a specific area.
“I will introduce myself to say I’m a buy-to-let landlord, and this is what I plan to do, and my target tenant profile,” she said. “I want to see how much feedback I get from them, how helpful they are and how knowledgeable they are.”
She waits until she is further into the process – say, in the middle of the conveyancing stage of her purchase – to discuss the fee structure with them.
It’s important to make sure the agent belongs to a consumer redress scheme so that you can raise a complaint if needed.
She warned other landlords to beware of agents who try to charge compliance costs to landlords. Ms Wong said she’s spoken to the Property Ombudsman and they’ve been clear that these are operational costs that cannot be passed on to landlords.
You can also ask an agent to refund those charges if you spot them being sneaked in, and escalate to the redress scheme if needed.
“There are a lot of landlords who do not know that letting agents cannot do that,” Ms Wong said.
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Inspections are also vital, so make sure letting agents agree to do them and follow through. “It’s very frequent that agents do not carry out the number of inspections in the agreement,” she said. “But actually it’s very important because this is how problems get picked up.”
If you get malicious damage insurance, for example, the insurer can refuse to pay you if the problem could have been identified earlier by regular inspections.
Inspections can also flag other issues, such as an extra person living in the property and pets that have not been declared to the landlord. Carbon monoxide and smoke alarms that are not working are another thing estate agents should be checking for regularly. “If accidents happen, the landlord could be in trouble,” she added.
The key to the success of their business is having good tenants.
“It really doesn’t matter whether you have a good letting agent or you self-manage,” Ms Wong said.
“The due diligence on the tenant, the profile of the tenant is very important, because at the end of the day they are really the one that gives you the problem – like, let’s say, if they do not pay rent on time or there’s a lot of repairs to be done.”
For Ms Wong, raising rents to the market rate isn’t always the best option because it can mean losing a decent tenant.
A longstanding tenant in the Northampton area has been in the property since she acquired it six years ago. “He’s only notified the agent twice,” she said. “He’s a very, very good tenant and on that ground I’m reluctant to increase the rent to the market rate.”
To mitigate the risk of a bad tenant, they have rent guarantee insurance as well as legal cover insurance.
Other landlords can be another key asset to helping you with your business, especially when you get started. Ms Wong recommends signing up for property investment training opportunities and speaking to other landlords at networking events.
Would you be interested in speaking to us about how you built a successful buy-to-let portfolio? Please email money@telegraph.co.uk if you would like to take part in our series.
