As a once famous man called Twain said years ago, “buy land because God isn’t making any more of it”. That message still rings true today and there’s a good reason why. As the population of the world increases, more and more people are looking to rent homes rather than buy. This creates a unique business opportunity for property entrepreneurs who buy houses at a low rate; remodel and re build them and rent them out to tenants. This a great money maker if done correctly so if this is something you’re interested in, this article will give you a few of the main aspects to buying and letting out Buy to rent property. For the benefit of this article, I spoke with a Birmingham Letting Agent who has many years experience in letting out property in the midlands area, about some of the dos and don’ts when investing in buy to let property. Lets have a look at some of the points.
As with any investment, it’s important that you know the risks and the benefits. Typically, purchasing buy to let property will require a mortgage, unless you have a wad of capital saved up to buy it outright, which means there is greater risk involved. Therefore doing your research on the surrounding area and market is vital to the success of your new venture. Research rent prices, insurance, utilities and any other important aspects to your business. If the investment is still viable after this research, you know you can continue.
It’s no good purchasing a property for students and trying to sell it to workers from the capital. You need to know what type of tenant you are targeting before purchasing the property, as this will affect the rent rate, as well as the quality of the interior. For example, a top of the range kitchen and bathroom probably doesn’t bother students as long as the rent is kept relatively low. City workers might feel differently however so make sure you think about your prospective tenants before purchasing remodeling the property.
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There are two ways to manage an investment like this. The first way is to be completely hands off and let a letting agent let out your property for you. They take care of all the contracts and communication with the tenants so you don’t have to. This is probably the preferred way, especially if you are not experienced doing this. If you want to be much more hands on however, taking charge of the letting yourself can be challenging but can be rewarding. Do you research before hand and see which method is right for your situation.
There are many other things you should consider before investing in buy to let property, however if you consider these 3 things first and find the investment is still viable to you and your business, this type of property market can be very lucrative if handled correctly.