Take Jimmy Campbell, finance director of a quoted publisher in London. Still dressed in his rabbit furs, Campbell flew straight from graduation at Edinburgh to stacking supermarket shelves in Hong Kong before rising to finance director of a supermarket chain in Japan. To keep in with the British property market, he hung on to and rented out the Edinburgh flat he'd bought as a student.
'At first, I rented it out through friends,' he says, 'but I ... I can't tell you the terrible experiences, even after years of therapy. So I turned to an agent. She was the dragon every other student loathed the most. If she was terrible to tenants, she was the one for me.'
Ten years later, Campbell has parlayed his investment into three flats, looked after by the same dragon - now a family friend. 'Luckily, the public-school boom at Edinburgh has carried on,' he says. 'My agent only rents to toffs under guarantee from Mummy and Daddy. The buggers never see their deposits back. Treat the places like crap. Still, that's my pension fund.'
This highlights the first and perhaps only rule of amateur landlordship: don't do it yourself.
DIY landlords slip up in three key areas. First, in the property itself.
If you're a landlord by default - either through inheritance or because your company posts you to Ulan Bator on a one-way ticket - you don't have much choice. But if you've come into a windfall, have cash to invest or want gear up a portfolio, the type of property you buy is important. Most people buy properties that they themselves would like to live in. Big mistake. 'The typical scenario,' says one estate agent, 'is the cashed-up couple who invest in a flat to rent out, intending one day to let their teenage children move in.
'Immediately, their criteria are at crossed purposes. They end up with a flat that is neither the best possible investment nor best possible teenage bolthole. Usually, the flat does time as an under-occupied pied-a-terre before being sold. The problem with des res-es is that they tend to generate low yields. So I might buy a cheaper, less desirable property that has a strong yield.'
Not long ago, the smart money was piling into ex-local authority properties which enjoyed average capital appreciation but yields as high as 10%-12%.
But the amateur landlord in I-have-to-like-it-myself mode wouldn't touch these dumps.
The second mistake amateurs make is in tenant selection. As a general rule, DIY landlords tend to be too trusting with prospective tenants and not tough enough. Take references. Good bank references, personal references and employee references are essential to protect and maximise an investment.
An unscrupulous tenant may try to sidestep an inexperienced landlord by spinning a story like 'I can't get you the reference because my bank manager is on holiday'. Faced with this, the DIY landlord may find it hard to say: 'I'm sorry, go away.' This only encourages problems later on in the tenancy.
The third mistake is the deposit. To be absolutely covered, a landlord shouldn't let the tenant onto his property without first extracting six weeks' rent. Why? Because tenants often fail to pay the final month's rent, in effect leaving the landlord without a deposit with which to cover dilapidations. The common stunt pulled by the unscrupulous tenant is to turn up with all his luggage but proffering only four weeks' rent, claiming he'll get the rest the following day. The trusting DIY landlord believes him and lets the tenant in. That's asking for trouble.
'If you don't have a third party acting for you whose job it is to enforce the agreement to the letter,' says Peter Rickenberg, rentals expert at agents Leslie Marsh in north Kensington, 'you tend to find the quality of your investment slips. And if you don't serve notices correctly, there might be contractual issues.'
So what was Campbell's 'terrible experience'? 'Oh, I took on a tenant who was recommended by friends as 'the most reliable person in the world, safe as houses'. He did a runner. I had to pay his council tax and his telephone bill.'