Despite some recent changes to lending rules, buy-to-let property is still an extremely popular way for people to invest their money. There are many obvious reasons why, considering the current housing shortage and the low number of new builds that are not coping with the demand of the rising population. Some people are uncomfortable with putting their money into stocks, bonds, shares, ISA’s that may be confusing and don’t have the stable feel to them that good old bricks and mortar have, and prefer to invest in housing. Buy-to-let properties can have excellent long term returns, but like all property investments there are risks and there is no guarantee a property is going to make money. So to avoid this and to maximise your profit making potential, we have put together a short guide to help you on your way to becoming a successful, wealthy, landlord.
Researching the market & choosing the right area
The amount of research you do before making an offer on a property is crucial in how successful it will be. Fortunately the internet provides a wealth of data that you can use to help narrow down your search. To get a grasp on average prices/rents and trends take a look at The Home Let Rental Index and property portal sites such as Zoopla and Rightmove. These will give you an idea about what areas offer and their amenities – sites like Property Detective and Dataloft are good for that also. Try contacting other landlords or letting agents who can advise you. This can be done in person, but again the internet provides forums where people can meet and share information. Lastly, nothing beats getting off the computer and visiting physical locations where you will be able to get a true feel for any potential areas you are thinking of investing in.
Calculate how much you want to spend & shop around
This is a crucial step so take your time in calculating as accurate a budget as possible. There may be additional costs and factors that may not have occurred to you so make sure you are aware of all of the expenses. There are also handy online calculators that can give you estimates. Some of the factors to keep in mind are:
Maintenance – You will set a certain level of maintenance in the tenancy agreement but you are required to keep the property in good order.
Letting agent fees – Handing over the running of the property to an agent will free up your time and lower stress levels but that peace of mind comes at a cost.
Other costs include insurance, survey fees, and how much of the appliances you want to supply and maintain. All have to be factored in when choosing rent levels and weighing it up against mortgage payments. There is a wide variety so shop around for best deals and see what other landlords in the area offer.
Weigh up the pros and cons