If you are interested in the buy to let market then the following tips will help you to succeed. There are many pitfalls and you need to be aware of them so that you can make the right decisions as this will be crucial to your success.
1. Is Buy To Let Right For You?
Is investing in a buy to let property really the best thing for you to do? You need to know what all of the risks are and not just the benefits. You will need to commit thousands of pounds in a property and you will probably require a mortgage for this.
With house prices continuing to rise and the number of people looking to rent also on the increase it is possible for you to make some large profits in this market. But what happens if there is a turn around and the market falls?
Do a lot of research and learn as much as you can about the market. Learn from the experiences of others who have been successful. Get them to tell you everything, good and bad, before you make your final decision.
2. You Must Choose The Right Area
This might seem obvious but it is surprising how many people get this wrong. What is special about the location that you have in mind? Is it in the commuter belt? Are there good schools in the area? Is it a place populated by students?
It is vital that you choose an area where people will want to live.
3. Do The Sums
You need to know the average cost of properties in your chosen area and the rents that you are likely to receive. Aim to cover at least 125% of your mortgage repayments and go higher if you can. You also need to consider the ongoing maintenance costs for the property.
Have a plan if the property is not let for the first few months. This happens a lot, and you do not want to find yourself in a difficult financial position because of this.
4. Take Your Time To Find The Best Mortgage Deal
You need to be prepared to shop around for the best deal on your buy to let mortgage. There are many lenders out there all offering different deals so spend time searching them out. An independent broker can help a lot here.
5. Who Is Your Target Tenant?
You need to have it clear in your mind what kind of tenant that you are looking for to rent your property. This will dictate how you prepare the property before it is ready for rent.
If you are looking for young professionals as tenants then you need a modern style. If it is a family then a blank canvas is a good idea as they will have a lot of their own belongings. For students, comfortable and easy to clean are more important than luxury.
6. Do You Need An Agent?
You need to decide whether you will use the services of a letting agent or manage all of this yourself. Finding tenants and looking after them can be a real headache and very time consuming. If you are looking to build a portfolio of buy to let properties then an agent is a good idea.