While buy to let has had to contend with a few tax changes over the last couple of years or so, it still represents a good opportunity for those looking to invest. It still has the potential to provide a good return – you get the income from the rental of the property as well as taking advantage of any rises in house prices.
According to This is Money, there is a greater demand for tenant properties now more than ever and with mortgages relatively cheap at the moment the climate is still good for first time property investors. The key, however, is what property to buy. Here are some helpful tips when choosing your first buy to let property:
Do Your Research
With such a big investment, the more you know the better chance you will have of finding the right property. This is a long-term investment and one which you need to put a lot of energy and time into.
Picking the Right Area
Look for up and coming areas that might expect to see better than average price growth over the next few years. You may want to specialise in areas like student accommodation if you have a university nearby. If you are focused on professional tenants, then researching how close the local amenities such as train stations are, is going to be important.
The cheapest property is not necessarily the best investment – if you are not sure what you should be looking for then it helps to build a relationship with your local estate agent who understands the buy to let market and can tell you what works and what doesn’t.
Calculating Your Buy To Let
Working out how much your buy to let is going to cost and what you can get back through rent is difficult for first timers. The last thing you want is to be making a loss before you even get going with your property portfolio. We have an online Net Rental Income Calculator that can help give you a clear idea of what you can expect.
Unless you are lucky enough to have enough money to buy the property outright, you are going to need to get a buy to let mortgage. Having a chat with an independent broker will give you more options and help you select the right product for your needs. You shouldn’t simply rely on your bank to supply the mortgage as it may not be the best deal out there. It doesn’t hurt to shop around.
Take Into Account Costs and Responsibilities
Buy to let gives you some responsibilities. Any property you buy is probably going to need some work undertaking to make it suitable for tenants. This might be as simple as putting in safety measures like fire and CO2 alarms to meet legislation. You may have to opt for major renovations if you are looking, for example, to split a house into flats or have bought a property that is in disrepair at a cheaper price.
If you are handling the running of the rental property yourself, it takes a lot of time and work. That’s great if you have it. Most landlords will work with a letting or estate agent and so there may be fees that will need to be taken into account.
The other thing you should bear in mind is your legal responsibility as a landlord and what this entails both in the short and long term.
A buy to let property can be a great way to invest but it can also be complicated. That’s why you should, wherever possible, work with an independent professional Estate Agent like Northwood who knows the area well and can give you the advice and guidance you need.