Mortgage rates are at record lows, and this means that as a buy to let investor, you can really make deals stack up! But how do you know if the buy to let market is for you? Here’s our top 5 tips if you’re thinking about becoming a landlord.
- Research the Market
This will be a big investment, and usually means taking our a mortgage. When house prices rise, this means that you can make huge leveraged gains above your mortgage debt, but when they fall, your deposit takes a hit whilst the mortgage stays the same. Investing in property can pay off both in terms of income and capital gains but it is essential that you know exactly what you’re getting in to before you invest, acknowledging all potential pros and cons. If you know someone who has invested in buy-to-let, or rented out their property before, ask them about their experiences; the good and the bad. Do your research beforehand and you have a much better chance of your investment making money in the future.
2)Think About Your Target Tenant
Who are you planning to let your property out to? What do these people really want out of a potential home?
For example, students are usually looking for somewhere clean and comfortable, but are more concerned with price rather than luxurious decor. A family will have plenty of their own belongings to fill their home and make it their home, and usually want several bedrooms to accommodate children. Young professionals are usually looking for a modern, stylish home close to lots of local amenities like restaurants and shops.
Remember that by allowing tenants to make their mark on a property by decorating it to their own tastes will encourage them to stay for longer. Along with the fact that Ethical Letting don’t charge tenancy renewal fees, this is great news for you as a landlord.
3. Choose an Up & Coming Area
Where in your town has a special appeal? Is there a certain area with great transport links, or in the catchment area for the best local school?
You’ll need to find a property that’s within your budget, and in an area that your ideal tenants would like to live in. If you choose a property that;s relatively near your own home, such as in the same city, you’re likely to know the market better than if you chose somewhere further afield. This gives you a head start in spotting a property and location that you know will do well!
4) Do The Maths
Before buying your property, find out what your mortgage repayments will be and how much you are likely to earn each month in rent. You will also need to take in to consideration maintenence costs on the property, and research landlord insurance. Is this property going to make you any money? Buy to let mortgage lenders often look for a larger deposit, and charge rates higher than for residential mortgage deals, so this is worth taking in to account.
5) Consider How Hands On You Want To Be
Buying a property is only the first step. Advertising your property and then renting it out yourself can be incredibly time consuming. Prepare to give up your weekends dealing with viewings, repairs and creating advertisements. If this isn’t something you have time for, a great agent is essential. Ethical Letting take care of 24/7 emergency repairs, and carry out quarterly inspections of your property, then report back to you in order to nip problems in the bud quickly and efficiently. That combined with our low fees means means that we’ll be a real asset to your buy to let property. We offer a quality, personal service. We put the happiness of yourself and your tenants well before our profits! It pays both of us to look after your tenants and in return, they’ll do the same for you.