If you’re looking to make an investment in property, the Buy to Let market still offers strong opportunities. If you’re keen to invest in your first Buy to Let property, you’ve landed on the right article. This blog post is specifically meant for people who are considering Buy to Let ownership and contains some helpful tips and will probably raise some considerations that you may not yet thought of.
Identify your target tenant
You’ll be investing a considerable sum of money in your property and taking on the responsibility of a mortgage and the need to carry out repairs to the property. Getting the wrong tenant in your property could be a very costly mistake. For this reason alone we’d recommend that you avoid the riskier end of the Buy to Let market for student accommodation particularly on your first property.
Whilst there will always be a regular stream of students wishing to rent for between one and three years, the potential for costly damage to the property is too high.
Finding a property in an desirable area to live will attract young couples and small families – the kind of people that are going to build a nest for their family and hence look after your property.
Find the right mortgage
Recently the Buy to Let mortgage rates have fallen at the same rate as mortgages for owner occupiers. Typically a Buy to Let mortgage rate is slightly higher than one you’d find for an owner occupier mortgage.
We would recommend that you visit a mortgage broker to get the best impartial advice of the Buy to Let mortgage market. As a first time entrant in the Buy to Let market you’ll have to an awful lot of homework to find the best mortgage that’s suitable for your needs. An independent mortgage broker will be up to date with all the latest mortgage products available and will be able to find the best match for you.
We spoke to Andy Craddock of Mortgage Force, Worcester who gave us some helpful advice on mortgage fees “Look out for big fees that are applied to some Buy to Let mortgage products, particularly if you are looking at mortgages that are fixed or track interest rates for a short period of time. Remember that you will face similar fees again when you renew your mortgage.”
Get to know local tradesmen
Whether your a good DIY-er or not you will still need to build a good relationship with local tradesmen. As a landlord you will need to certify the gas and electricity safety on an annual basis. For this work you have to use a qualified tradesmen. As your property portfolio grows you might be able to get multi-property discounts for this work.
Remember that your Buy to Let property portfolio of even just one property is a business. Apply for trade discount cards at DIY stores and save money on the products you need to renovate the property.
If you have a lot of waste to clear from the property during renovation you’ll need to hire a skip. Again remember that you are now running a business and will likely need to frequently hire such items. We spoke to Redmond Stone of Reds Skip Hire (http://www.redsskiphire.co.uk/) who told us “The core of our business is with trade customers who frequently use our skip hire services. We are able to offer payment terms and discounts to our trusted regular customers.”
Do you want to be a hands on landlord?
Our final piece of advice and subject for you to consider is whether you wish to be a hands on landlord or whether you would prefer to use a letting and property management agency.
The pro’s of using a dedicated agency are that they will take some of the risk out of the letting for you. They will perform background and credit checks on the potential tenant for you. They will also handle tasks such as collecting rent, conducting checks on the property to make sure it is being kept in good order and in accordance with the rent agreement. They can also take care of things such as the annual gas safety checks.
The cons are the fees that they charge for doing any or all of these tasks. You can do all of these things yourself if you have the time to do so. Perhaps the deciding factor will be the profit that you will make each month. Getting a quote from a letting agent and carefully doing your sums will help you decide.
New upcoming legislation from the government will mean that all landlords will need to check the eligibility of their tenants to live in the UK. This may be another good reason to use a letting agent in the future and get them to take care of this requirement for you.
We hope that this article has provided you with some useful pointers for getting yourself set up as a Buy to Let landlord. We really like hearing feedback from our readers. If you have recently become a Buy to Let landlord and have some tips you’d like to pass on, please leave us a comment here on the blog.