With the introduction of new pension rules that give us all more control over how we handle our money in retirement, one area people are seriously considering investing in is the Property market, particularly buy to let. On the surface it appears a win-win situation with income being derived from monthly rental fees and the value of the property hopefully increasing over a period of time.

There are, of course, various pros and cons that new landlords need to consider before they decide to delve into their pension pot.

Before you cash in part of your pension and head off into the rental market with reckless abandon, do your sums first. You will need to get some pretty good advice and give yourself plenty of time to reach the right decision. Moving into the buy to let market is not for everyone. If you have spent the last forty years building up a nice pension pot then you don’t want to throw it away in a moment of madness.

Assuming that you have weighed the good and bad and made an informed decision about the amount of money you have available then here is some good advice about how to make the best of your investment.

Choosing the right property

Key to making it in the property letting game is finding the right flat or house to rent out. That may sound like an obvious thing to say but it is one that new landlords often ignore, more concerned with the right price and how much they can get for a mortgage than location, location, location.

The good news is that a pension can be classed as a single income when it comes to judging whether you can get a lender to give you a mortgage or not but that shouldn’t cloud your attempt to find a property that is in a good location and has great rental prospects.

Pick an area that people will want to live in – like Goldilocks and her porridge, the best choice is often one that is neither too cheap nor too expensive. Of course it pays to do your research if you are looking at a specific area. Find out what kind of properties are being rented out and how much Tenants are paying, then compare that to the amount you are likely to have to pay in mortgage repayments.

Identifying your market

Hand in hand with choosing the right property is what market you are aiming at.

• Are you buying in an area where a high percentage of tenants are students?
• Do you want someone professional who will look after your property more responsibly?
• Would you prefer a family who are likely to want to rent over a longer term?

If you are carrying out all the landlord duties yourself then you will need to choose your type of tenant carefully.

Your responsibilities as a landlord

Becoming a landlord is not just a simple case of buying a property and throwing a couple of tenants in there, hoping for the best. You have responsibilities towards your tenants that will include providing maintenance if something goes wrong and installing safety devices such as smoke and carbon monoxide alarms. There are also a number of regulations to be aware of such as the circumstances when you can put up the rent and where to go to if there is a dispute that needs to be settled.

Renovations and maintenance

Before anyone moves into your new rental property you will need to ensure that any renovations have been carried out. Tenants are not going to want to move into a property that is run down, has dirty carpets or paper peeling off the walls. You will also probably need to install the basic home comforts such as a cooker and make sure that the plumbing and electrics are all up to standard. As a landlord you will also be liable for the on-going maintenance of the property, which means it is a good idea to have a number of contacts such as plumbers and electricians who you can reliably call on in the event of an emergency.

Finding the right tenants

For private landlords who are doing all the work themselves, it’s a lot easier with our access to the online world to find tenants for a property. You just need to advertise on a site like Zoopla or Right Move and wait for prospective tenants to contact you.

Of course, it’s one thing finding someone to rent your flat or house, it’s entirely another to find the right tenant who will cause few if any problems. That means you will need to undertake credit and background checks, including perhaps checking the prospective tenant’s last landlord for information. Fortunately, there are a number of online agencies that can help you check on potential tenants and it really does pay to have someone who knows what they are doing undertake this side of things.

Staying on top of the legal stuff

When a tenant moves in there is usually a tenancy agreement, a list of conditions that both parties are expected to adhere to. This will also include an itinerary of the property in the flat or house including things like furniture, cooker, fridge and so on that need to be kept in good condition. It is always better to have access to a qualified and respected solicitor when you are putting all the legal matters together, as well as giving you a reliable backup to turn to if there are problems during the tenancy.

Using a letting agent

If you are a silver landlord and have recently retired but are looking for another career in later life, then it might seem sensible to take on a project like letting out a property. If you have experience in the industry then it’s not a bad idea especially if you have time on your hands. Many silver landlords make the choice to employ a letting agent who can handle specific aspects of the letting, such as finding the right tenants or collecting the money.

Letting agents generally charge a fee of 10 and 15% of the rent collected in exchange for various services. If you just want to collect the money and not get involved with the day to day running of the property then the agent can also handle maintenance including monitoring the tenants. Taking your time to choose the right letting agent is important – it not only pays to shop around but check with existing landlords to find out their experiences.

Whilst on the surface it sounds a great idea to invest some of your pension pot in the buy to let industry, there are plenty of things to consider before you actually part with your hard earned cash. Our advice is to do all the research first and make sure you aren’t putting your future finances at risk. Done properly, renting out a property can bring in valuable extra cash for your retirement as well as giving you an investment that should hopefully increase in value over the coming years.