Buy To Let Tips For First Timers

| June 17, 2015 | 0 Comments

If you are looking for a long term investment, then buy to let property is worth considering. It’s still very popular despite the recent financial crisis, and also gives you more options when it comes to financing a home loan. So, we thought we’d put together some key hints and tips to get you started.

Location, location, location

Location is vital for a buy to let. Given that tenants can move out with just a month’s notice, you need to find somewhere that is relatively desirable and services a significant number of needs. Depending on the kind of market you are targeting, think about buying near a school, amenities, train stations, nightlife or transport links. Search online for homes for sale in the area you are considering and don’t be frightened to pay a visit to some of the stores around the place. You will hear a lot of different opinions from the working residents.

Research, research, research

If you know anybody with experience of buy to let, talk to them. Read guides from the experts, go to banks and see what info they can give you. But, above all, learn! There could be a landlord’s association in your area, so drop them a line and see if anyone has any tips. A lot of people have been in your situation before, so make use of them.

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Work out your budget

Never start looking for a new house without working out your budget first. You need to plan for how much you can afford for the house and how much yield the rent will give you – you also need a deposit, typically between 15% and 30%. Your rental agreement will need to generate 125% of the mortgage repayments for the lowest interest rates. Finally, you need to make allowances for repairs, and when the property is empty, and you are not receiving rent – so a contingency fund is recommended.

Look around

As you are investing in a property, take your time to find the very best deal for you – and negotiate as best you can. There are plenty of dedicated buy to let brokers out there that could offer you a better deal than the major banks, so it is wise to shop around.

Market to your tenants, not to yourself

It’s tempting to build your dream home and set up your buy to let property as you would like to live in it – but you won’t be living in it. For example, a professional renter could want something trendy with good access to local nightlife, while a family will want a garden, space, and access to the right schools. And a student may wish for something very basic and cost-effective. All are different, so it is essential to target your tenant and locate/decorate for them, not yourself.

Buy to let properties are still an excellent way of growing your money. But to make the most of it, you have to play the game by the rules and provide people with a home they will be happy to live in. The one thing to remember is that when that property is empty, you will be paying for it. And that’s as good a reason as any to keep your new investment in the best possible condition.

Category: Home Loan

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