Many people understand the asset of property as investment more than say the stock market, where fortunes can be won and lost quickly. Bricks and mortar have literally a sturdiness about them that makes investors happier with the financial commitment and return. The buy to let market is booming, but it’s imperative to choose the right property in the right area and then get it managed properly.
Here are a few top tips to think about when buying a property to let.
- Maintenance and repairs can be costly, so think about purchasing a property that is not very old. If you aren’t going to be living in it then buying a pretty cottage with loads of period features isn’t going to be on your agenda. This is a business transaction rather than a heartfelt emotional purchase.
- Buy a property that is ‘lettable’. Think about where your potential tenants need to live, is it close to transport links or near a university if you are considering student lets. It is highly unlikely that a property that is convenient for the tenant will ever be empty for long. Larger more expensive family homes can be more difficult to let. So convenience should be part of your search criteria, a property that is near to the shops or a town centre and good schools will always be popular.
- If you aren’t living in the property then don’t restrict yourself to a specific area. Go where rentals are popular and the yields are greater. Concentrate on where and what will give you the best return for your money and ensure there is a quality market for tenants.
- Look at the quality of the area within which you are buying, a rundown district will reflect the type of tenant you will get for your property and could ultimately cost you more money in damages or loss of rent.
- Always negotiate the price especially if there is any damage to the property such as cracked walls, bad plaster work or poor quality rooms such as kitchens and bathrooms. To achieve top rental income for your property it will need to be updated and in good working order. If the property is in disrepair then updates must be factored into any renovation costs.
- As an investment buyer you will not be in a chain so this does give a distinct advantage over other vendors, speed will be on your side.
- If your rental income is higher than the cost of a repayment mortgage then this is a good indicator that the property is right for a buy to let. Look at getting a fixed rate.
- A buy to let mortgage is different to a standard mortgage, it will normally require a larger deposit, the minimum requirement is usually about 25% of the purchase price, however some of the best rates for buy to let mortgages require a 40% deposit.
Remember, just because you aren’t intending to live in the house, it doesn’t mean you should buy the first thing you find. Think first!
By Harry Price
Harry Price is a writer and painter from the south coast. In his spare time, he loves to travel and explore new local culture, cuisine and landmarks.