By buytolet.org.uk Top ten tips for buy to let: buytolet.org.uk guides you through the investment maze
If you want to invest, or just want to know a little more, leading buy to let website: buytolet.org.uk provides ten essential steps to successful buy-to-let investment.
IT seems like only yesterday that buy to let was the most talked about investment on the planet.
You couldn’t switch on the television or pick up a newspaper, without some well-known personality talking about their multi-million pound portfolio and property gurus popped up everywhere promoting the dream.
For a while it looked as if the party would last forever, but the banking crises in 2008 sent the market into a tailspin, as mortgage deals dried up and house prices tumbled.
Now with lower house prices, rising rents and improving mortgage deals investors are once again being tempted back into bricks and mortar investment.
For those that can afford to raise a large deposit, buy to let is proving to be an attractive investment, with income returns outstripping meagre savings rates and a temperamental stock market.
But before dipping your toes into the market, leading buy to let website: buytolet.org.uk urges would-be landlords to remove their rose tinted glasses and research the market thoroughly.
‘Like any investment, buy-to-let comes with no guarantees, says Lee Grandin of buytolet.org.uk. ‘Remember interest rates must rise again one day. It is more important than ever before that you take a long term view on your investment and have money saved for void periods and unexpected emergencies.’
So if you are planning on investing, or just want to know a little more, leading buy to let website: buytolet.org.uk provides ten essential steps to successful buy-to-let investment.
1. Research the market. Do your homework and ensure you know the risks as well as the upside. Your money might be better off in another investment vehicle. Remember with buy to let your money will be tied up in capital in a property that might fall in value; this proposition might not look so attractive compared to the potential of a 5% annual fixed rate return on your savings.
2. Check out the neighbourhood. It doesn’t have to be posh or the cheapest, just “promising” with a good variety of amenities on the doorstep. Is the neighbourhood in the commuter belt for young professionals, does it have good schools and parks nearby for families or a university on the doorstep for students? A good location will increase your chances of getting a tenant sooner.
3. Do the maths. Before signing on the dotted line on an investment property tot up the costs and work out if you can afford it. According to buytolet.org.uk lenders want rent to cover 125% of the mortgage repayments and are looking for 25% plus deposit. It is worth bearing in mind that the most attractive buy to let mortgages also come with large arrangements fees. Don’t forget to factor in any future rate rises and an emergency fund that will cover you for void periods (when tenants are not living in the property). Try to be realistic, what would happen if the property is empty for a couple of months or interest rates rise?
4. Shop around for the best mortgage deal. Always get several quotes and compare their terms, do not be tempted to take out a mortgage with your local bank or building society, remember loyalty counts for nothing and will not guarantee you the best deal.
5. Consider your ideal tenant. Establish the type of tenant you want to attract and then furnish it to appeal to them. For example, students are likely to want an unpretentious, clean and comfortable property while a young professional may prefer a stylish, blank canvas they can make their own mark on.
6. Keep your feet on the ground. Don’t be taken in by get rich tales of property millionaires. The buy to let gold rush is over and buytolet.org.uk warns would be landlords to invest for income and not short-term capital growth.
7. Step out of your comfort zone. It may be tempting to choose a location you know well to invest but is it the ideal neighbourhood? Cast your net further, there may be up and coming areas showing greater promise, such as a university town or suburb with an excellent school catchment that would appeal to families.
8. Barter. Remember as a buy to let investor you hold the same Ace cards up your sleeve as first time buyers. The fact you are not in a chain means a great deal to a person selling the property, so make a low offer and don’t be talked into paying too much.
9. Know the downsides. Don’t be carried away on a flight of fancy. House prices are falling, what if this continues and the capital value of your property falls too? What will happen if you can’t afford to remortgage or if your property sits empty for several months? Properties need repairing and regular maintenance can eat into your profits.
10. Consider how involved you want to be. Being a landlord is like running a small business, you may want to be hands-on 100% or if time is precious, you may decide to employ the services of an agent. Agents will charge a management fee, but this might be money well worth spending for the peace of mind of knowing that someone is on hand 24/7 to take care of your property. If you do decide to take on the management yourself, buytolet.org.uk says: expect to be available at weekends and evenings for viewings, repair and maintenance and any emergencies that may arise.