Buy to Let
Introduction
Generally, the more time and effort you put into your investment the better return you will get.
Choose some potential investment locations a EUROS What can you afford? Do you want to live close to your property and manage it or will you use a letting agent?
Pick your ideal tenanta EUROS Within the areas you have chosen, look at the type of tenants available and compile a list of features your property needs to have to attract these sorts of tenants.
Choosing your Property
Ideally investors should be looking for a property which is a EUROS under market valuea EUROS TM.
Research - Independently research the area you are interested in, using sources such as the online versions of local newspapers and community websites
Review all sources of potential properties a EUROS Due to the high cost of estate agents, some consumers prefer to try and sell their houses themselves. Look at local newspapers/websites
Meet all the estate agents in the area even the undesirable ones, some investors only speak to those they like the look of and miss out on potential bargains
Visit as many properties as possible a EUROS The perfect property is hard to find a EUROS some experience landlords visit up to 25 properties before finding the right property.
Avoid paying over the odds for a property by using www.landregistry.gov.uk, which lists any property that has sold in the last few years and when.
Make sure your surveyor does a thorough inspection of the property. As a Landlord, you will be liable for all maintenance so make sure to know about all potential problems.
When you finally find a property - negotiate. Some sellers may drop the price if it means a quick sale. When looking at a property you should ask questions about the sellera EUROS TMs position.
Finances
Ensure you know the real value of the rental income you can secure from your chosen property. Letting agents often exaggerate rental yields, so contact them as a potential tenant looking for a property similar to yours to get the truth.
Dona EUROS TMt consider buying a property until you are sure you can generate sufficient rental income to ensure you can pay your mortgage and a EUROS servicea EUROS TM the property.
Make sure you have a plan in place which protects you against sharp interest rate rises and rental voids for example, sufficient rental income after paying off the mortgage each month to have an emergency fund.
To get the highest yield from your investment, shop around for the most competitive mortgage deal.
Look at the tax advantages offered by the various types of mortgages - Mortgage Interest payments can be offset as an expense against rental income for tax purposes so you should consider this.
Consider interest-only and repayment optionsa EUROS Many investors choose interest-only mortgages believing that capital gains will provide them with a profit at the end of the period. Consumers need to decide if they want to take this chance or stick to a repayment mortgage.
Speak to a specialist broker a EUROS These companies live and breathe buy-to-let mortgages and are better placed to find you a good deal than companies, which offer more general advice.
Read the fine print a EUROS Make sure you understand any redemption penalties or deed release fees, which apply to your potential mortgage.
Choosing your tenants
You have chosen your property to appeal to certain types of tenants, advertise in publications or on notice boards they are likely to see.
If you are going to use a letting agent, find out about their reputation and make sure you can trust them.
Show the tenants round yourself and chat to them. A letting agent is most interested in getting a a EUROS salea EUROS TM but you are likely to be pickier.
Obtain references and if possible, speak directly to their former landlords a EUROS ita EUROS TMs easier to ask questions about prompt payment and any problems they may have had.
Draw up a comprehensive tenancy agreement, which protects both parties and ensure the inventory is signed a EUROS this will avoid any problems later.
If your tenant develops payment difficulties, deal with the situation calmly but swiftly. The longer they dona EUROS TMt pay rent, the harder it will be for you to get your money.
Review your finances
Review your redemption penalties a EUROS It may be cheaper to pay the redemption penalties in order to get out of an uncompetitive deal.
Look out for special deals a EUROS To encourage remortgaging, some lenders are offering fee free deals or cash-back incentives, look out for these deals.
Consider moving your portfolio to one lender a EUROS Some lenders use portfolio-lending arrangements, which average the rental calculation across all the properties. This means that the higher yielding properties can subsidise the borrowing on the lower yielding ones.
Resources