The Rental Market
Income from Rent

The Rental Market for Income

Weigh Carefully

Deriving income from the rental market may be likened to earning dividends from shares. The property market is the equivalent of buying and selling shares as a trader for the capital gains available. As with any market obtaining an income depends upon customers. In the rental market this means tenants.

Like a Pig in..

Without occupiers empty premises still attract fixed costs. In order to secure a tenant as soon as possible it will be necessary to maintain services. Water and electricity must be connected. Even without use these services require the payment of fixed supply charges or connection fees. Unoccupied property also tends to deteriorate over time. It may well be necessary to have a caretaker watch the premises to report on any servicing that may become necessary. In some parts of the world severe weather events are common at certain seasons so a check must be maintained after storms, snow or high winds. Unfortunately it is not only from natural causes that empty property loses value if remedial measures are not taken. There are human problems.

Unwelcome Tenants

Empty property is likely to attract squatters. Evicting them is not easy, can be very time consuming and expensive. As illegal as squatting may be it is possible for a squatter to deny an owner occupation of the property by dubious references to the courts. Legal processes may take months to resolve even though the merits of the illegal occupiers case may seem obvious from the start. During this period no income can be derived and it is likely that the squatter is paying no heed to maintenance. The result will be no income, a large legal bill and some costly renovation and redecorating. The squatter probably earns nothing and can probably obtain legal aid.

It is likely that a retiree's rental property will be in his original country of residence. Knowledge of a landlord's rights and obligations are not necessarily within the experience of the property owner. Some prospective tenants because of their social and economic status enjoy protected privileges as tenants. It may be difficult to increase their rents or give them notice to quit. Property maintenance costs can quickly outstrip controlled rents and selling a place with a sitting tenant of this kind can be all but impossible. It may seem harsh but this is not the tenant that is needed to derive income from the rental market. Such tenants are not the individual landlord's responsibility.

Squatter's Des. Res.

Some people are just bad tenants. Without a good caretaker to maintain a check on the property some occupiers simply trash the place until it is uninhabitable. They then simply move on without notice. Since all of their details of identification were probably false in the first instance they will probably be untraceable. They will probably also have defaulted on some rent payments. Prospective tenants must be carefully vetted before property is let to them. This is a job for an expert and it will not be cheap.

Hobby or Business

Hobby or ....

Any rented property will incur costs for rent collection, regular inspection of the premises and occasional maintenance. The difficulties of arranging this can be amplified if the property is in a foreign country. The rights and obligations of tenants and landlords will also vary in different countries. As an example, in Cyprus access to water may not be restricted to the premises on which the well is situated. How many may share access will affect the value and therefore the rental value of all the premises involved. Easements and common pathways can be a problem in the United Kingdom.

... Business

It may be possible to get a friend to perform caretaker, handyman and rent collector duties but this is unlikely to be a practical solution over a long period. Tenants are best dealt with on an impersonal basis via a company. Again there are costs involved. The rent must cover all of these outgoings and return a profit if an income is to be earned. It is very unlikely that outgoings can be covered by the income from one property only even with a friend working at no cost. In fact if you have less than three or four properties in any one location then you have a rental hobby not a rental business. Hobbies usually cost money. They do not bring in an income. Earning an income from the rental market may seem a good practical idea but it needs careful thought and planning as does any business.

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