The No-Frills Guide To Buy To Let Investment
If you are looking for a safe place to put your money, then investing in property might be a good plan. However, like everything in life, your initial choices will determine how successful your venture will be. With this in mind, we thought we would go through some of the key areas you should be looking at when you are investing in the buy to let market.
Choosing Your Location
It's important to choose the right location for your buy to let property. In simple terms, some places are cheaper than others. If you want to maximize your returns, you will need to consider the local rental market more than the house valuations. In some cities, it can be cheaper to rent than it is to buy, so this could leave you in the sticky situation of earning less rental income than you are paying on your mortgage.
Choosing A Mortgage
Buy to let mortgages are a little different to the standard home loan. Lenders will see it as a business opportunity and, depending on your credit rating, they could give you more credit than they would for a typical mortgage. However, it's worth bearing in mind that any time spent with an empty property means that you will be paying for that as well as your own mortgage. If you can't afford to make those payments, then you should look for a more affordable option.
The Right Time To Buy
Nobody has a crystal ball to see into the future, but there are certain ways to choose when to make your investment. First of all, find a reputable investment property specialist in the area you are looking into. They will have instant access to past records of sales, and have an idea of where the local market is going. It's slightly different to using a real estate firm because their responsibilities are centered on the seller, not the buyer. Also, keep your eye out for fluctuations on a national level. The general economy can have a large effect on housing prices - and, don't forget - rental prices.
You also need to think about the extra costs of buy to let homes. The likelihood is that you will need to put some money into the property to make it look appealing to prospective tenants. You will also have to think about putting some money aside to deal with emergencies. Almost anything that goes wrong with the fixtures and fittings will be your responsibility. And, as a landlord, that means paying for boiler fixes and other expensive repairs.
Finding A Tenant
Finally, you will need to find a tenant to rent out your home. Of course, there are no guarantees that you will find someone suitable, but there are some ways of reducing the risk of having a nightmare on your hands. Make sure you get some reliable references from previous landlords and also check out their work status. You want somebody that has been in work consistently - although not necessarily with the same company. Finally, a credit check can help highlight any possible financial issues.
As you can see, there is plenty to think about when it comes to investing in buy to let. However, if you can navigate through these essential points, then you should see a healthy long-term return.