Landlords Need to Understand their Rental Business from Top to Bottom.

The one thing the current crisis should have taught landlords is not to be greedy. It should also of underlined that landlords need to understand fully from bottom to top how a rental business will work before risking money.

I have lost money in the past, invested in equities that to be honest I didn't really understand. I researched lots of information telling me that they were a 'BUY' but I didn't actually understand what it was I was buying.

I have tried to learn from these painful mistakes and moved on ( no doubt at some point in the future I will forget these lessons and get hurt again - people are stupid - or forgetful - or plain greedy if the truth be told).

This same human greed and stupidity consumed the chief executives at many of the major financial and banking corporations. They didn't actually understand what they were actually investing in, they were looking at numbers that seemed to keep going up but didn't really know where they came from. ( as it turned out it was the poor of America who had been sold houses they were never going to afford).

On a smaller scale the British bank ( that we all now own - great heh ? I always dreamed of owning a share in a badly run bank in the North East) Northern Rock was laid open to self certifying claims of six figure salaries by many supposed 'marketing consultants' that were in reality only on £22,000 and a Ford Mondeo. All this questionable debt finally bought them down because fundamentally nobody including themselves knew how stable their debt was.

Anyway finally to the landlord bit. I was watching the tv last night with a program regarding property in Manchester and specifically the buy-to-let property boom in 1 and 2 bed city centre apartments.

It focused on a poor lady landlord who had visited a property seminar and had then signed up for 7 apartments with a value of £1 million.

The landord didn't know Manchester, she had no experience in renting out property but had been assured by a smart suited sales guy that they would make her a fortune.

A year or two down the line, the landlord has been running at a rental loss on all seven apartments that she can no longer sustain so is been forced to sell all seven apartments. All of them as you will probably predict are worth less than the landord paid for them.

This poor desperate landlord was forecasting a loss on her property investment of £400,000. Which in my mind might be on the optimistic side.

As with the whole sorry mess from the top to the bottom it has been fed by greed, which has thrown all caution and logic out the window.

I called the top of the housing market 5 years ago as prices in relation to rents stopped the majority of property investment as been a viable business. The team at Property Hawk have from the very start called for caution from landlords on any property investment.

( NB we have never pushed any property seminars or city centre property developments because we knew they were bad opportunities for our users).

However prices have continued to rise. But now they fall and my advice to any landlord or potential property investor is, do your research and understand your business from top to bottom.