Buy to let is a fantastic investment, as long as you are aware of the many variables associated with such a purchase. Over the decades, this has become a much more complex investment choice with more stringent tax measures being put in place for landlords.
The first thing you need to do is choose your property and location extremely carefully. When you choose to buy to let, you are tying your funds up in a property that could potentially drop in value.
On the flip side, you also stand to reap some great profits if the price of your property goes up.
Ask the Important Questions
Do your research and uncover properties in up-and-coming areas, as well as lesser-known areas with great potential and those on the outskirts of a popular area. Don’t go purely for a low-priced property as there is no guarantee that this will increase in value.
Instead, consider the location for its lasting or growing appeal. Are there good schools? Is the crime rate low and/or decreasing? Are there good transport links?
You should also consider looking at locations with a wider lens. Buying closer to home may seem easier and feel more comfortable. But sometimes you’ll need to look further afield in order to get a better deal.
When your property is managed by an agent, the extra distance will not make any tangible impact.
Finding the Right Mortgage
Take your time choosing the most cost-effective buy-to-let mortgage. The mortgage market right now is extremely competitive, so you will likely be able to access some great deals especially on a fixed-rate basis.
Most buy-to-let mortgages are interest-only deals but you should research all the options before meeting with a professional to get some expert guidance.
The Ongoing Cost of Buy to Let
Work out your key tenant demographic and what this tenant might want and need from the property. By creating a property that ticks all the right boxes at the outset, you have the best possibility of charging the rents that you want.
If you’re buying a property that needs work, we suggest working out a ballpark of immediate and ongoing costs (renovation, improvement and maintenance) before you sign on the dotted line.
Any major renovations and ongoing maintenance will cut into your rental income. This is absolutely fine as long as you are prepared for such an outcome. You also need to consider the cost of agency fees and other routine landlord expenses, and how they might impact on your bottom line.
Wear your Negotiating Hat
One of the major stumbling blocks for buy-to-let investors is also one of the biggest cost variables – the cost of the property itself. Many people don’t even realise that negotiating on a property price is practically a given.
Find out as much as you can about the reason for selling and get to know the market. This will put you in a strong position and potentially save a huge chunk of capital at the outset of your investment.
For advice on any aspect of buy-to-let investments, give our expert property team a call today on 0203 281 7433 or drop an email to info@alescoproperty.com