Buy-to-Let is a form of investment where you buy a property, sometimes with the aid of a mortgage, for renting out. With a new type of tenancy introduced with the 1988 Housing Act, investing in residential property became more attractive, as landlords had more control over their properties.
Whilst it is not quite the ideal investment strategy it once was, investors that are looking for ongoing continual growth are revisiting the buy-to-let market. Buying to Let should be considered a medium to long-term investment. Industry experts are predicting a firm future and say that with the days of escalating short-term monetary growth gone, investors in it for the long term are sure to capitalise.
The availability of loans with attractive rates of interest, has increased the appeal of owning rental properties. However, Buy-to-Let, like any investment has no guarantee, but those with more overall faith in bricks than stocks, we are here to offer our knowledge and advice.
Choosing a location is probably the first thing to consider. To get an idea of what people are looking for in an area that interests you, read the local property papers, gather information about local employers, seek advice from letting agents, and research the demand and supply for rental property in the area.
Consider whether the area has good transport facilities, shops, schools and colleges, whether there is a University locally. Are these amenities the kind that your tenants will expect? Know your market before taking into account what kind of property and what size property you should invest in. Don’t let personal taste cloud your judgement.
Consider your target tenants; who are they and what will they want and expect? If they are young professionals, the property should be modern and stylish, if they are students; it needs to be affordable, clean and comfortable. Families will want something larger and not too ostentatious. Imagine yourself in their shoes, how would you like to live in your investment property? It is important to think about the needs of would be tenants rather than would be purchasers.
Don’t forget to do the maths, think about what would happen if the property sits empty for a couple of months, or major repair work may need to be carried out to the property if things go wrong. Shop around for the best value mortgage.
Give some consideration as to whether you will want to let the property out yourself, or engage an agent to do so. Agents will charge you a management fee but will deal with any arising problems, and they will have a network of tradesmen to hand such as electricians, plumbers, decorators etc. Managing the property yourself will cost you less, but be prepared to spend time with viewings, advertising and having to deal with repairs. Familiarise yourself with landlord and tenant law.
Being a landlord isn’t all about owning a property. A landlord is an entrepreneur; the property is their business and as such, the businesses should be run as an efficient and profitable venture. A successful landlord therefore, is one who recognisies the investment potential, and calculates the risks involved.