Tenant: ?How long did you think you would get away with it??

Property investor: ?I don?t know what you are talking about?.?

This is a quote from a conversation that recently took place between a property investor and his angry tenant. So what exactly happened?

Well, a new property investor bought a house with a cottage as an investment. Shortly after taking transfer, he placed a tenant. For a few months everything was fine... then one day he got a frantic call from his tenant.

No clue

The call started exactly as above, with the tenant angry about certain things happening on the property: including no receipts from the agents for his payments and other misunderstandings and technical problems.

The tenant was threatening legal action against the tenant and the conversation had apparently gotten somewhat heated.

So how did this happen? According to the investor, he was quite simply not sure. The tenant was unhappy but he had no clue if all the claims were actually true.

It in fact turned out that the tenant had threatened the landlord based on research conducted by him on the internet: he called the landlord with quotes based on half knowledge, some basic understanding and shaky conclusions.

The lesson?

The problem was that the investor knew no better ? he had not researched the matters himself, is not conversant in any landlord or tenant law or practices and had left all the detail to an estate agent after he had found the tenant.

He employed the agents' services to ensure that the administration was off his head so that he could save some time. He didn?t even know how to approach the situation, let alone help negotiate a solution to everyone?s benefit.

The lesson? It is imperative that property investors in the residential by-to-let market are knowledgeable and have their facts right. In this case, the investor could not even evaluate the situation, as he had no knowledge of what was allowed or what is right and what is wrong.

Who was at fault?

As it turned out, both the tenant and the agent had some fault. However, by this stage, the investor had started his problem solving at a very disadvantaged position.

If the investor had had at least a basic knowledge, he could have calmed the tenant down and told him how he will solve the problems. Yet, in his uncertainty, this didn?t happen.

With the amount of information available, only a mouse-click away, what are the odds that this tenant (or any other), now very much less happy, will attempt to cause problems when things go wrong ? and rightly so if the investor is at fault?

Lack of knowledge

But that's not all. What if the investor, by mistake, and lack of knowledge, had some illegal clauses in the lease, resulting in a situation where the tenant could actually take legal action against him? Fortunately this was not the case in this story, but it could very easily have been.

The point is simple: as the market has turned in favour of buy-to let investors ? with higher interest rates making bonds that much more expensive ? it stands to reason that property investors who employ letting agents should expect the agent to take care of everything. However, what if they don?t? What is the investor supposed to do with no knowledge?

Whether you are a residential property investor, employing the services of a letting agent or not, it is now becoming a necessity, not a luxury, to get all the correct knowledge in order to run a successful portfolio.

This information is provided by The Property Investor Network.