You might be new to the buy-to-let market and unsure of where you would like take the leap. In most cases, people tend to invest in property close to where they live or where they know. Take a little time do your research on the areas that interest you and go and speak to some agents in that area.
When buying a property think of your target market and put yourself in their shoes of what they would be looking for.
A student – would want somewhere close to universities or public transport and a property that is comfortable and easy to clean.
A family – most will have their own belongings so may prefer an unfurnished property and might want outside space and parking. Schools within the local area might be a factor.
A young professional – this type of tenant tends to prefer a modern and stylish property with plenty of amenities nearby.
Make sure you know what you can afford. Most buy-to-let lenders would want the rent to cover at least 125% of the mortgage repayments.
You need to take in to account maintenance costs, what if your property was left empty for 1 or 2 months, your tenants stop paying rent, the mortgage rate goes up. You need to consider the costs incurred when buying too, such as stamp duty, solicitor fees and any mortgage setup fees.
If you’re buying a leasehold property you need to also think about service charge and ground rent and any applicable letting agency fees.
All these factors need to be considered when choosing a property to buy.
Becoming a landlord is a big step in anyone’s life: it’s exciting, hopefully profitable and, without doubt, hard work! When you consider that there are actually 108 separate pieces of legislation and over 300 regulations that govern private rentals to tenants such as:
- Right to rent checks
- Gas safety checks
- Contracts
- Inspections
- References
- Registering your deposit
- Chasing unpaid rent
When buying a property to rent out, there are number of insurances you can take out:
- Landlords Buildings Insurance – This could be included in your service charge.
- Landlords Contents Insurance – This would cover your contents if there was a fire or flood etc.
- Rent Guarantee Insurance – If your tenant fails to pay rent, this covers any legal costs incurred and bailiffs cost.
- Landlords Liability Insurance – If one of your tenant’s trips and falls or hurts themselves while living in the property, they may have grounds to file a law suit against you.
For any of these insurances you would need to take up advice from a mortgage advisor or insurance company.
Speak to an independent mortgage advisor to see what the best rate they can offer.
Click here to book an appointment with our mortgage advisor.
When becoming a property investor one of the most important things you must do before making a purchase is to research the market. You need to get an idea of the kind of price you will need to pay for a property and what the returns are likely to be in terms of rental income. A good place to start is on property portals like Rightmove and Zoopla (they will give you an idea of sale and rental prices in various areas) but you should also speak to a reputable estate agent who you can trust.
You also need to decide what kind of property you are looking for. Do you want something that is spick and span and ready to go, or are you thinking of renovating a property, with the hope of seeing greater returns on your investment? These are important considerations that will boil down, largely, to two things: time and money. Always think carefully: a beautifully finished property might look perfect, but will the potential rental income cover the mortgage? A do-er upper might seem like a fantastic opportunity, but will you still generate a profit once the work has been done?
At Julie Twist Properties, we have an extensive knowledge of the sales and the rentals market, meaning that we are well placed to advise you about investment opportunities, potential rental yields, and financial and legal matters relating to property investment.
