Five key elements you should consider when making a buy to let investment.
Good returns are still being achieved in this market, as long as you manage your risks and conduct thorough due diligence.
Please follow this guide before making a buy to let investment.
This is the single most important thing to get right once you have found a potential property. An expert buy to let mortgage specialist can help you negotiate a good deal.
Many buy to let mortgages are available only to people with at least 25 per cent of the property purchase price to put down as a deposit.
Speak to an expert for advice, or research areas where there is a good rental market. If you do your own research you may want to consider contacting your local authority or housing department and ask if there is a demand for rented accommodation.
Good signs include new companies setting up or moving into the area. Also, if there are universities and colleges nearby then the student population is a good source for potential tenants.
Speak to estate agents, letting agents and carry out your own research on the internet to find out what areas get the highest yields.
Will there be any new development nearby? Are the transport links being improved? Are new companies moving into the area? Families will want good schools, young professionals may value proximity to rail stations and major motorways. Additionally, remember the golden rule: don’t let your personal taste affect the type of property you buy. Property investment is a business.
It is important to choose your tenants with care. Most are honest and reliable, but a tiny minority can cause problems.
Consider whether you want students, professionals or families as your ideal tenants. Ensure the furnishings in the property suit your preferred target market.
Advertise your property in local publications and online with well-known websites. Ask lots of questions when tenants call and ask for employment, bank, previous landlord and even personal references. Make sure you contact the references provided and follow through before handing over keys to the property. Take one month’s rent as a security deposit and set up the monthly rent payments as a direct debit.
Make sure the tenants sign up for the utility bills and council tax and prepare a proper inventory to check off when they move in.
Can ordinary people make money by investing in property? Yes – in the same way that wealthy people have done for generations. However property is a long-term investment – the average value of a UK property doubles every 10-15 years, so don’t expect a huge return overnight.
Look to the future when you buy a property, and research thoroughly the potential the property has to achieve greater returns. Look out for local knowledge. For example, is any new development planned nearby? Are transport links being improved? Are companies moving into the area?
Professional mortgage advice is more important than ever.
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