The Do’s and Don’ts of buy-to let investing

The buy to let industry as seen quite a change in recent years.  It’s no longer strictly for the professional investor since landlords now come in a range of shapes, sizes and ages.  The newest group to the profession seems to be savers or baby boomers, who, finding they have a little extra money to play with due to the recent annuity changes, want a solid investment opportunity without having to play the stock market.  Since low interest rates no longer reward savers, many are finding that the buy to let market yields more rewards in retirement and in doing so are moving their money away from banks and putting it into bricks and mortar. To the uninitiated, this sounds easy enough.  But, like anything, it’s not all plain sailing with a round of golf in between. There are some dos and some don’ts that should be followed – so here are a few tip from Battersea estate agent, Eden Harper to get you started.

Don’t rush

Whatever you do, don’t rush into any investment.  What you are looking for is a property that will increase in value over time and bring in a nice little monthly cash benefit.  These days very few people will be paying in cash, so taking the time to get a good mortgage broker is key and also worth every penny you spend. If you find someone who is independent, they can access many more mortgage deals than those who aren’t. For example, this year alone there are a total of 655 mortgage buy to let deals available. Take your time, and find the one that suits you best.

How much can you borrow?

Start really looking into your personal finances and find out what you can easily borrow. Once you know this you can extend your research and find out where you would like to buy a property and also if you want to do the job yourself or whether you need to find yourself a letting agent.  This could be key for you, since you may want to invest outside of your area because prices are lower, but this will mean you will need someone to take care of the daily tasks – particularly if it is too far for you to travel just to fix a washing machine.

Target market

Remember different areas attract different types of tenants.  If, for example it’s a university town you may want to consider the property as a place for students therefore you would rent out rooms at a particular rate.  Or if you want to attract a family you may want to refurnish the place or give it a revamp and thus the property would be marketed as a whole rather than split into rooms.  Spend time looking into what the going rate is for a room, flat, or whole house in your area.  This will give you a good idea of what you can charge and what the returns will be.

Take notes!

It may sound obvious, but carry a pen and notepad to every viewing.  You need to be able to remember what was good/bad about a property and how likely the owners will negotiate on price.  If someone needs a quick sale, you may be in luck and be able to knock a couple of thousand pounds off the price, but if the sellers are desperate to upgrade they may be less likely to cut the price because he/she need a particular four-bedroom house in Surrey for example.

Try to remember that buy to let mortgages require higher deposits (typically 25% of the whole cost of the property) so it’s not always easy to get a good deal. Whilst other mortgage deals look at your income, these types of deals are based on your yearly rental income; but it would be advisable that you take home at least £25, 000 per year just in case there are any unforeseen expenses.



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