Investing in property can look like an attractive proposition, and there is certainly money to be made. However, it is essential that you do your research and go in with your eyes open, as with any investment, there are pros and cons. Speak to current landlords to get the benefit of their wisdom and thoroughly research the buy to let market.
Location, location, location
Look for properties in promising areas. This isn’t necessarily areas that are the cheapest or most expensive, but areas where people want to live. This could mean good commuter links, good schools or leisure facilities-whatever your target tenant wants (see 3). Also,don’t just look around where you live, although you know the market, it may not be the best area to invest in
Do the maths
Make sure you’ve done your sums. Get out a pencil and paper and thoroughly go through every number to make sure it all adds up. You need to work out how much a property will cost, factor in maintenance/renovation costs and then look at the rent that you can realistically get. Remember that your property could sit empty for periods of time as well.
Shop around for a mortgage
Make sure you shop around for the best rate. Do your research but also speak to a good independent mortgage broker. Again, it may be worth speaking to experienced landlords for their recommendations
Identify your target tenant
Put your own opinions and tastes aside and consider what your target tenant is looking for. For example, families want good schools and commuters need good transport links, but it also stretches to the type of house they want. While young professionals want modern and stylish properties, families often have lots of belongings or furnishings and may want something more neutral they can put their stamp on.
Look for a doer-upper
One way to increase profits is to invest in property that needs work doing to it. Firstly, these properties give you ammunition to haggle, but you can add further value by refurbishing. Always remember to do your sums to make sure that the time, labour and materials needed is worth it. A rough rule is that you want the final value of a refurbished property to be at least the purchase price, plus cost of work, plus 20%.
Haggle
As a BTL landlord you’re in a strong position. If you’re not in chain you’re a much more attractive proposition, plus if you know the market well you can negotiate more effectively.
Research the pitfalls
Like any investment, property has it pitfalls. Make sure you have looked at it from every angle, spoken to experts and done your sums. Don’t forget to consider the tax rules and other legislation, plus the costs involved.
Think about how hands on you want to be
Buying the property is just the start! Deciding to manage the property yourself will mean more profit, but will also mean that you are responsible for repairs, maintenance, advertising and screening tenants and all the associated paperwork. You will also be responsible for collecting rent and dealing with any issues. If you decide to use an agent, shop around to get the best deal in terms of fees, but also in the services that are included. Whichever route you go down, remember that looking after your tenants will ensure that they are more likely to stay long term and look after the property.
