The best advice for those looking to buy-to-let
1. Research the market
Buying-to-let can be a huge gamble therefore it is important that you do your research before you invest your money.
First of all, it is vital that you are making the investment that you want. Who knows, in years to come your property may fall in value which means your capital won't generate you a profit. Investing in the buy-to-let market involves committing thousands of pounds into a property and most likely taking out a mortgage; therefore get online or speak to others who have invested in the property market.
However, buying-to-let has a number of perks. Firstly, you can renovate your property and add value to it yourself - which for many people can turn into their life-long career. Property investments have also paid off handsomely for thousands and thousands of people - leading to a number of more profitable investments in the future.
There's no denying that if you're thinking of going into buy-to-let you have your eyes wide open and consider the potential disadvantages as-well as the advantages.
2. Don't jump straight into first mortgage you see
Why do you think banks make so much profit per annum? One of the reasons is because people take out mortgages without doing their research - and can't pay them back.
Considering different banks and building society's is key to taking out a viable mortgage. It's worth speaking to a good, trustworthy independent broker - or even better, speaking to somebody you know who has been through this process.
Surfing the internet will also give you tons of option.
3. Carefully choose your area
One of the most important decisions you need to make is the location of your property.
The best piece of advice to give is to not base your area on it being 'cheap' or 'expensive' - base it on a place people want to live. You need to consider things like; What are the schools like? Does it have nearby attractions? Has it got good travel links?
This also refers back to research - where does your target audience WANT to live.
Choosing your area also links too choosing your target audience - you wouldn't invest in a property in the countryside if you were targeting University students.
4. Consider your target tenants
Many of those who failed in the buy-to-let business is simply because they didn't research their audience. It's simple, for a successful letting - it is vital that you find the right tenants.
Put yourself in your target audiences' shoes - What are they looking for? Where about's is best for them to live? For instance, a student from Birmingham University wants student accommodation in Birmingham - not Solihull.
When you consider your target tenants, you should also consider the interior of your property. If you're targeting students, than you want something clean and comfortable but not luxurious. However, a young upper-class couple is likely too prefer a slick, spacious and modern home.
Finally, bare in mind that for your tenants to stick around, it's likely that they'll want to put a stamp on their home. Letting them move furniture around, decorating or adding photo's are small allowances which will make all the difference.
5. How hands-on do you want to be?
If you've decided that your definitely going to buy-to let, then your next step is whether your going to rent it yourself or do so through a letting's agency. Both ways have their advantages and disadvantages so again, it's important that you do your research first.
Renting yourself can be advantageous because you avoid paying fee's to a letting agency and make more money off the rent itself. However, renting yourself can add unnecessary stress - first of all you must be prepared to give up most of your time, with likely unsociable hours, to participate in viewings. Also, you would have to arrange your own advertising and repairs.
Agents on the other hand; although they charge you a management fee, they will deal with your problems such as repairs as they will have close networks with plumbers, decorators etc.
6. Consider looking further afield and/or renovating
Many investors seem to look in areas near to where they live however, your town may not be the best area to generate a good profit margin.
The benefits of casting a wider net are endless for a number of reasons. For instance, you as an investor may live closer to rural areas rather than the city - whereas many tenants are more likely to be located in the city. Even though you may be far from the property, hiring an agency will benefit you as they can keep their eye on it.
In addition, renovation can be very profitable for investors. By doing a property up, your increasing the value of your investment and also advertising a more attractive, current property which will draw in a much wider audience in comparison to a dull, dated interior.
However, remember that if you do, ensure that the price is low enough not to further yourself in debts that can't be made back off tenant rent.
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