Tips for First Time Buy-to-Let Investors

It’s a big step investing in your first property. With so much to know, research and find out from experience, here are some starting tips for first time …

It’s a big step investing in your first property. With so much to know, research and find out from experience, here are some starting tips for first time buy-to-let investors.

Research the Market

Property investing has paid off generously for many people, both in terms of income and capital gains, but it is essential that you go into the property market aware of all the potential advantages and disadvantages.

Investing in buy-to-let involves promising thousands of pounds to a property and more often than not, taking out a mortgage. When house prices rise, this means it is possible to make leveraged gains above your mortgage debt, but when they fall your deposit gets hit and your mortgage doesn’t change.

The more knowledge you have and the more research you do, the better the chance of your investment paying off and becoming profitable in the future.



The right property does not alwayscome down to the cheapest or priciest, respectively. The right property means a locationwhich is attractive to live in for a variety of reasons, meets your needs, and obviously this needs to be in line with your target tenant. Reputable London lettings agency Leo Newman can help provide insight into the ideal locations and places to live if you are unsure on where to start.

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Where in your town has a special appeal? If you are in a commuter belt, where has good transport? Where are the good schools for young families? Where do the students want to live?

Know your costs

With each different property comes a different associated cost so it is important that you make sure you know all costs related to each one. For example, maintenance costs, tax costs, and estate agent costs, and factoring them into making a decision about a property.

Buy-to-let lenders typically want rent to cover 125% of the mortgage repayments and many are now demanding 25% deposits, or even larger, for rates considerably above residential mortgage deals.

Find the best mortgage for you

Do not just walk into your bank and ask for a mortgage. People who do this often come off second best because they don’t always asses all possible mortgages available and understand which one would be best for them.

The cheapest mortgage rate is not always the best for you. It depends on what you want to achieve and therefore it is key to ensure that you research different brokers and find out their different rates and what they involve. It alsois advantageous to speak to a good independent broker when looking for a buy-to-let mortgage. They can help you find a tailored mortgage to suit your needs and ensure you get the most out of your money.

Most buy-to-let mortgages are prepared on an interest-only basis, so the amount borrowed will not be paid off over time but rather at the end. This is tax efficient, as by repaying the initial capital as you go along with your repayment loan will decrease part of the monthly paymentswhich are made up of interest. Therefore, more of your rental income would therefore be taxable.


Research Target Market

Make sure you know your target tenant and what their needs and are.Who are they and what do they want? For example, if they are students, it should be easy low maintenance, comfortable and cheap to live in.

Look for rental yield

With houses prices rapidly rising in London, experts suggest invest for income and not short-term capital growth. Therefore, to compare different property’s values, look at their yield which is the annual rent as a percentage of the purchase price. This will allow you to evaluate statistically between different properties and find the best investment.

Don’t be pressured to overpay

Many first time investors get rushed into buying a property as theybecome emotionally attached anda lot of the time pay more for a property than it’s worth. Talking to other investors who are in the industry or who have experience in the property world foradvice and tips is advisable.Make sure you know the area, for example how quickly houses have been on sale for, as it could be an indication into how desperate the seller is. Always ensure you make an offer below the asking price and are looking for houses that are undervalued.


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