Top 10 buy to let tips

1. Do your research!
This is especially important if you are new to the buy to let market. Make sure you are aware of the risks and potential pitfalls of any investment. It is a good idea to chat with other landlords and investors and learn from their experiences. If you have a shortage of time or don’t feel passionate about property you may find there are other investments which will suit you better. Remember that investing in a buy to let property is not just about making money; as a landlord you have a responsibility to your tenants.

Before you make any decisions be sure this is the right investment for you.

2. Prepare for the unexpected!
Make sure you set some money aside for the unexpected. Your property may sit empty for a few months each year or you may have maintenance issues such as a faulty boiler to finance. One rule of thumb some buy to let investors apply is to assume in any financial planning that the property will sit empty for two months of the year. If you don’t have enough money in the bank to cover voids in rent or a major repair issue, do not invest.

3. The cheapest option isn’t always the best!
Beware of buying any property which is in need of major work or has high maintenance issues. Although you may save some money in the initial investment, any saving may be cancelled out by the cost of work and the rent lost whilst the property is being repaired. In some cases run down properties can be a worthwhile investment but make sure you obtain several quotes for the cost of the work as well as factoring in the length of time the property will be empty.

4. Location, Location, Location!
Choosing the right location is crucial for any successful buy to let investor. This isn’t always the most expensive or the cheapest area, but it is always a place where people want to live. Think about what your tenants will want – look at areas in a commuter belt, areas popular with students and areas close to good schools. It is important to make sure the property matches the appeal of the area, for example there is little point investing in a small flat which is near the good schools as families will need a sizable house.
Don’t just look at properties in the surrounding area. It is important to be aware that your home town may not be the best area for investment. Be prepared to look further a field in the search for promising areas.

5. Get a good mortgage deal!
Always shop around when looking for a buy to let mortgage. Make sure you get a variety of quotes and take the time to compare the market. In order to make your investment as profitable as possible it is important to make sure you are not paying over the odds for your mortgage repayments.

6. Protect your investment!
A standard domestic insurance policy will not cover many of the eventualities you may face as a buy to let investor. Buy to let investors have unique insurance needs so be sure to get adequate cover from a specialist broker. Click here for more information on Landlords insurance.

7. How much time and energy do you have?
Before investing in a property consider how involved you are prepared to be. A property management agent can look after the property on your behalf but will charge a fee for this service. Using an agent is often a good idea if you do not live near the property or have limited spare time. If you decide to use an agent be sure to research the market and find out about the fees and services offered before making a decision.
In order to get the maximum return on your investment you may decide to manage the property yourself but be prepared for the time and energy involved in carrying out repairs, finding tenants, collecting rents and so on.

8. Haggle!
When buying property remember to haggle over the price. If you are not part of a chain there is less of a risk of the sale falling through which makes you very attractive to vendors - use this to your advantage! You may be able to secure property at a lower price than a higher risk buyer who has to sell their property in order to purchase another.

9. Think neutral!
When choosing the interior décor for any buy to let property be sure not to let your personal taste get in the way. It is always best to opt for neutral colours and styles in order to appeal to the widest possible market.

10. Look after your tenants!
Your tenants are an essential part of your business and should be treated as such. Make sure you build a good working relationship with your tenants and operate professionally. Always give plenty of notice before inspections/visits and be sure to resolve any maintenance issues without delay. If you can keep your tenants happy the less chance there is of them moving out, meaning less money spent on sourcing new tenants and a reduction in costly voids in rent.

Click here for a buy to let insurance quote

Posted by Holly on 06/01/2008