Buying a property to let is a very different endeavour to purchasing a home to live in. But many people are aware both of rising rents and rising demand – and see an opportunity to make a solid return on investment. Here are 5 essential tips to make entering the buy to let property market process a little easier…
Choose your property carefully
Do not choose a buy-to-let property the way you would select a home for yourself. The location, size and design of the property should reflect who you imagine your tenants will be. If you wish to rent to a family, are there good schools, public transport links and shops nearby? If you’re renting to students, how close to the university or college is the property? Remember that renting to students is very different to renting to families or groups of professionals.
Get financial advice
Get professional mortgage advice. There are some great deals at present, but it’s still crucial to get advice from a qualified professional before signing on that hallowed dotted line.
It’s cold, hard business
Check your sums, then check them again. There are good profits to be made from buy to let, but ensure you build in all the costs for letting agents’ fees (if applicable), insurance and gas and electricity checks etc. Ensure that all red tape requirements are met, such as furniture that complies with safety guidelines. Vet potential tenants for credit worthiness and reliability. If you feel it necessary, you could also insure against rental losses for if your tenants fail to pay.
Long haul approach
There are no ‘quick bucks’ to be made with buy to let. Long term profits are likely to roll in, but be ready for sudden repairs and interest rate rises. Be aware that keeping your property for at least 10 years will reduce your Capital Gains Tax liability.
Build a cash safety buffer
Any cash left over from rental payments after paying your mortgage should be squirreled away in an instant access savings account, so you can use it to pay for unexpected bills. Experts suggest landlords should budget for at least eight weeks of void, in addition to other unexpected costs.