Purchasing a rental property can be an attractive prospect for those wishing to make an investment. Stock market volatility and the bounce back of the property market have seen a rise in sales of buy to let properties across the UK. For those considering purchasing a buy to let property we have put together our guide to help you make the best financial decision.
1. Do Your Homework
Making money through a buy to let property is never guaranteed. We have all heard stories of property tycoons who have made their millions through rental properties, but it would be naïve to assume that buying a rental property is in any way a get rich quick scheme. To minimize the risk of your investment we would strongly encourage you to do your research into an area. Consider who is your ideal tenant and the type of property and amenities that will appeal to them If you would like to rent to a young family for instance you should look at the local schools, are there playparks nearby? How far is it to the local supermarket? Whereas if your ideal tenant is a professional you will want to look at things like transport links, and consider the nightlife an area has to offer.
2. Don't Be Afraid to Ask for Help and Advice
If you are lucky enough to know someone who has invested well in property don’t be afraid to make the most of the benefit of their experience. It is very likely that they have made mistakes along the way, take this opportunity to learn from them and hopefully avoid making them yourself!
3. Crunch the Numbers
Most Buy to Let lenders will be looking for the rent you charge to cover 125% of the mortgage payments and many now require a 25% deposit on a property. It is also important that you factor in arrangement fees as well as stamp duty. With these additional charges, the costs of a buy to let property can soon mount up before you have even had a chance to secure a tenant! You should also consider how you would cope financially if the property were to sit empty. Could you still cover the mortgage payments whilst you search for a tenant? This might seem a bit overwhelming but there are some fantastic resources available like Online Mortgage Calculators that are a great for helping you establish what you can afford.
4. Manage Your Investment
Another important consideration to take into account is how you would like to manage your property. If you have decided to manage the property yourself, you will want to make sure you have budgeted for advertising your property and doing essential referencing along with securing vital documents like a tenancy agreement and statement of condition and inventory. Employing an agency to manage your property can take away the stress of securing a tenant and maintaining a property. If you would like to know more about how we could help we would suggest reading 5 Ways We Can Take the Hassle Out of Renting Your Property.