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Top 10 tips for would-be buy-to-let landlords
3:04pm Thursday 13th December 2012
There can be a lot of money to be made long-term from becoming a buy to let landlord.
But buying a property for invest-ment purposes is very different from buying a home to live in, and there are a number of hazards to avoid.
If you are thinking of investing in property and then putting it on the rental market, these top 10 tips from the National Association of Estate Agents will steer you on to the right path…
1. Do some research – Buy to let can be a legal, practical and financial minefield, and you will need to do your homework. Research the market, ideally with the help of your local NAEA estate and lettings agents, who will be able to advise on demand and any other issues in the area you are considering.
2 Know the demand – Buying where there is no rental demand can be fatal to a buy to let investor, yet it is a surprisingly common mistake. Make sure you are not investing in a market which is already saturated with the sort of property you have to offer, and do not be misled by stories of fast profits.
3. Understand your finances – Keep in mind whether you are in the market for capital gain when you sell or simply monthly rental income. This will help you decide what to buy and where, and what kind of mortgage you need.
4. Buy carefully – Make sure you buy a property which allows for sufficient profit margin. Do not go for a ‘bargain’ property which may turn into a money pit very quickly. Major repairs require much time and effort, and paying more for a property that is in better condition can be a wise move.
5. Decorate to demand – Don’t make the mistake of decorating and furnishing the property to your own tastes. Keep it simple, with clean lines, and do not fall into self indulgence. You are there to make money out of the property, so keep your market in mind but do not treat it like a dolls’ house.
6. Check for safety – By law you must make sure that the property you are letting complies with various safety regulations, like furniture and furnishings fire safety, gas safety, electrical equipment safety, and that it contains a smoke detector. You’ll also need certificates to prove these regulations have been met. You need to be aware of new and updated regulations as and when they arise.
7. Know your responsibilities – You, your letting agent and your tenants have different responsibil-ities, and it is important to know where these lie. As the landlord you will be expected to pay buildings insurance, ground rent and service charges and insure any items you leave in the property. Your letting agent will advise on others’ respons-ibilities as part of your contract.
8. Prepare for voids – Your property may be empty and not generate any income for periods of time, and you need to be ready for this. Advertising for new tenants, painting walls and replacing carpets can take months off your lettings calendar and you should have a plan in place for when this happens.
9. Move with the market – Know that if the market softens you will have to lower your rent in order to stay competitive, no matter how desirable your property.
10. Recruit a managing or letting agent – A good agent will find tenants, do background checks, draw up the lease, collect rent and inspect the property.