Top tips for buy-to-let
But if you are considering investing in property – or improving your returns on a buy-to-let you already own – it’s important to do things right.
- Do some research
Property investing has paid off for many people, both in terms of income and capital gains but it is essential that you go into it with your eyes wide open, acknowledging the potential advantages and disadvantages.
If you know someone who has invested in buy-to-let or let a property before ask them about their experiences – good and bad.
The more knowledge you have and research you do, the better the chance of your investment paying off.
If you are new to buy-to-let, what do you know about the market? Do you know the risks, as well as the benefits.
- Choosing the right area
Right does not mean most expensive or cheapest. Right means a place where people would like to live and this can be for a variety of reasons.
Tenants need good transport links ; job opportunities, good schools and shopping facilities
You need to match the kind of property you can afford and want to buy with locations that people who would want to live in those homes would choose.
Asking yourself these questions might sound simple, but they are probably the most important aspect of a successful buy-to-let investment.
- Do the sums
Before you think about looking around properties sit down with a pen and paper and write down the cost of property you are looking at and the rent you are likely to get.
If you are looking to raise a mortgage, speak to a reputable mortgage advisor to see what sort of rental return they are looking for in order to lend you money. Also take into account set up or arrangement fees and ensure you shop around. Please also remember that income from a rental property has to be declared to HMRC.
What will happen if the property sits empty for a month or two? Will you have funds available to cover the voids or necessary repairs ? Is your investment likely to be a property where there are void periods or will it always attract suitable tenants ? These are all things to consider.
- Think about who you want as a tenant
Instead of imagining whether you would like to live in your investment property, put yourself in the shoes of your target tenant.
Who are they and what do they want?
If they are young professionals it should be modern and stylish but not overbearing. If it is a family they will have plenty of their own belongings and need a blank canvas.
Remember that allowing tenants to make their mark on a property, such as painting, or adding pictures makes it feel more like home – these tenants will stay for longer, which is great news for a landlord. Also bear in mind that unfurnished properties attract longer term tenants.
- Buy at the right price
As a buy-to-let investor you have the same advantage as a first-time buyer when it comes to negotiating a discount.
If you are not needing to sell a property to buy another, then you are not part of a chain and represent less of a risk of a sale falling through. This can be a major asset when negotiating a discount, especially in a tough market. Make low offers and do not get talked into overpaying.
- Think about the down side
Before you make any investment you should always investigate the negative aspects as well as the positive. House prices can fall as well as rise, will you be able to continue holding your investment? What will happen if you can’t remortgage?
Even in popular areas properties can sit empty. One rule of thumb many buy-to-let investors apply is to factor in the property sitting empty for two months of the year. Homes often need repairing and things can go wrong. If you do not have enough in the bank to cover a major repair to your property, such as a new boiler, do not invest yet.
What if the tenant is unable to pay the rent ? Can you cover the mortgage ? Perhaps consider taking out a Rent Guarantee Insurance in the event that the worse could happen – it doesn’t cost an arm and a leg and is certainly recommended for peace of mind.
- What’s next ?
Buying a property is only the first step. Will you rent it out yourself or get an agent to do so? Agents will charge you a management fee, but will deal with any problems and have a good network of plumbers, electricians and other workers if things go wrong.
You can make more money by renting the property out yourself but be prepared to give up weekends and evenings on viewings, advertising and repairs.
If you are considering buying an investment property why not give us a call ?
We have years of experience of the lettings industry, current legislation and a great knowledge of the local area.
Whether you are looking to raise a mortgage or pay cash, we can talk you through the financing options and refer you to a reputable local mortgage advisor if necessary.
From plumbers and carpet fitters to insurance brokers for the best deal on your Landlord’s Building Insurance, we know them all.
We can tailor our service to cover anything from just advertising on your behalf, finding you a tenant or offering the full management package so you can enjoy your free time.
We offer FREE buy-to-let advice and can give an indication of how much rental income you can expect to achieve from your potential purchase….even over the ‘phone.
You’re not just buying a house – you are buying an investment. Let us make a difference to you.
38 Broken Cross,
Phone: 01305 265869
Mobile: 07941 601809