Rising rents and lower house prices are appealing to those with cash to invest in the property market. Keep in mind that like the majority of investments investing in a buy to let property doesn’t come with a guarantee. If you decide to go ahead follow our top tips for buy to let investments:
Do Your Research Are you aware of the pros and cons? If not make sure you do your research and make use of anyone you know who has already invested in a buy to let property. There is no point in buying a property as a buy to let investment if your money will work harder for you elsewhere. Investing in property ties up your cash, if the mortgage rates hike or your property decreases in value where will you stand?
Purchase The Right Property It is vital that you consider the area you are thinking of investing in, not just the property itself. You need to have a good rental demand to avoid dreaded void periods. Think about universities and hospitals if you are opting for group lettings. Great transport links and good schools are always attractive if your property will be marketed to families.
Broaden Your Horizons The majority of buy to let landlords invest in property close to their own home, whilst this can be sensible as you will have good knowledge of the local market don’t let it blind you to other good opportunities farther afield.
Consider The Figures This may sound simplistic but be sure you work out the maths of your investment. What will your rental yield be? Take into account costs like insurance and estate agency costs. How will you fare if mortgage rates increase? How would a void period affect you financially? Work out the figures for every eventuality to avoid disaster later down the line.
Tenant Targeting Whether or not the property you choose to invest in appeals to you is irrelevant. You need to ask yourself if it will appeal to your target tenant. A demanding garden will not be appealing to student tenants for example so think about what your tenant will want from their rental.
Consider Insurance You can safeguard your investment by purchasing a rent guarantee insurance policy. Shop around to find the best policy for your needs and be sure to read the terms and conditions. This may seem an unnecessary expense but it is a sensible precaution.
Haggle The sales market in the UK is not currently buoyant so use this to your advantage, the fact that you are not in a chain puts you in a very strong position to negotiate. Remember you can make any offer you choose so don’t be embarrassed to haggle.
Consider the Commitment Before you invest think about how much of your time being a landlord will take up. Are you going to manage it yourself or pay an agent? Using a commission based agent will certainly eat into your profit margins but managing your property yourself will mean giving up time to conduct viewings and deal with maintenance issues. Whether you choose to go down the DIY route or instruct a managing agent do your research before making your final decision, being hands on can lead to large financial savings.
Written by Sarah Male, Urban Sales and Lettings Online Estate Agents