To the outsider, life as a landlord seems as good as it gets. It’s the definition of passive income, and that’s the end of the story.

Unfortunately, as reality has it, it’s only the beginning. Sure, in an ideal world, being a landlord would be a simple equation. Tenants would pay you ‘x’, you would subtract several expenses, and you would live happily ever after.

Over recent years umpteen added complexities have been thrown into the mix, though. We will now take a look at how you can become savvier as a landlord, to overcome these recent hurdles.

Understand the new tax implications

The first thing you should do as a landlord is to get to grips with the new tax implications.

Essentially, the new rules state that you can no longer offset mortgage interest against rental income. This means that, in many cases, you will now need to pay tax on your full rental income, rather than just the profit.

There are a few ways you can get around this, however. You could, for example, set up a limited company, which would enable you to take advantage of different tax breaks.

However, there are pros and cons to all of the approaches and we will again emphasize that being a landlord is not a “get rich quick” scheme – there are all sorts of considerations to factor in.

Do you need a letting agent?

Like it or not, agent fees are rising. While 10% used to be the norm, now this is more like 15%. In other words, your real yield is constantly decreasing.

The obvious answer to this is to cut out the middleman and go direct to the tenant. But there are a few things to consider before doing this.

First of all, you need to be comfortable with the fact that you will be dealing with all of the queries and problems that will inevitably arise. Secondly, you need to have the time to manage this yourself.

Bear in mind, also, that there are some great advantages to using a letting agent. They have extensive local knowledge, for example, and they can also help to fill any gaps in your knowledge. They would, for example, immediately know when to suggest a rent increase due to their knowledge of the local, rental market.

As with everything, it’s a balancing act.

Remember the small expenses (and account for them)

The mortgage repayment is unfortunately just the tip of the iceberg. You also need to factor in ground rents, service charges and even insurance (yes, there are different types of insurance for landlords).

All landlords have to pay for these – but being aware from the outset can help you plan accordingly. You’ll know what is an acceptable rent figure to charge and also, you’ll know exactly what you need to claim back for in your end-of-year accounts.

Decorate shrewdly

One way to make your property more attractive – and to command a higher rent – is to decorate it shrewdly. This doesn’t mean spending a fortune on redecorating – a lick of paint and a new carpet can often do the trick.

Bear in mind, also, the target market you are aiming for. If you are targeting professional couples, for example, then a more minimalist look may be preferable. If you are targeting families, then a cosier look may work better.

Like any business, knowing your ideal customer can pay dividends when it comes to unlocking as much values as possible from your rental properties.