Property is an increasingly popular investment route both for professional, seasoned investors and for first-time landlords who want to make their savings supplement their income. However, success in buy-to-let is not guaranteed. Observing the following hints, tips and precautions will increase your chances of getting it right.
Look Before you Leap
Don’t get carried away with the potential benefits of buy-to-let. Understand the risks and the drawbacks as well. You have to put tens of thousands of pounds into a property, probably take out a mortgage, and cope with risks that are noticeably greater than those involved with your savings account or with some other kinds of investment. Make sure buy-to-let is the right option for you before you plunge into it.
Do Your Homework
Even when you have decided to go for buy-to-let, you still shouldn’t jump in. Make sure to do your research thoroughly. For a start, make sure to consider the location and pick one that is well-placed to attract tenants. Commuter belts, properties close to transport links, or family homes near schools and shops are all good examples in very general terms. Look at the rents that similar, nearby properties fetch and how long they stay on the market. Don’t forget to do your maths homework to. Check figures such as mortgage repayments, insurance and an allowance for maintenance costs against the rent you can realistically expect to make sure your investment is likely to prove worthwhile.
Know Your Tenant
It is best to pick a particular type of tenant you want to target, and make decisions accordingly. It is good to think about this early, so you can bear it in mind when doing all that homework. Think about factors such as the type of property you can afford and its location. Flats may be well-placed to target young professional singles and couples, for example, so you might choose to focus on properties in commuter towns and close to transport links. Think about your target tenant in things like décor and advertising channels as well, and try to make choices that will appeal to that group.
Shop Around for a Mortgage
Probably the biggest mistake you can make when it comes to getting finance for your property purchase is walking into your bank, asking them for a mortgage, and then accepting whatever they offer you (or accepting defeat if they refuse). It is unlikely your best mortgage deal will come from the same firm as your current account, so make sure to shop around to find the best deal you can.
Negotiation is very common when purchasing properties, so make sure it’s not a tool you neglect to use. This is particularly true of buy-to-let investors, as they have the advantage of not bringing a chain with them and therefore not creating as much risk of a sale falling through and causing delays. Make an offer below the asking price, albeit a sensible one, and see where you can go from there.