The prospect of being a first-time buy-to-let buyer can be daunting in the beginning. But things could be relatively easy to think about if you do your homework as an aspiring landlord. Undoubtedly if you simply do all the research on your part, then few things can be more beneficial in the long run. So where do start your research? A variety of things could make for a bumpy ride in the market for the budding landlords, especially with landlords left to jump over innumerable hurdles before they can settle for a piece of property. So before running into trouble, it’s absolutely essential that a first-time buy-to-let buyer ask themselves some of these questions raised in this small piece.
“You are buying property for your future tenants, and not for you to occupy it”.
You do this to make a profit from the rent you receive. For most landlords, things should do be just fine, as long as the rent they get is reasonably higher than the mortgage repayments they make on a monthly basis. So let’s look at some key questions you should ask yourself before making a property investment.
Where should I make the investment
Choosing the ideal location is really important. It is just as important as buying a home for your personal accommodation. As far as the first-time buyers are concerned, it’s highly recommended that they invest in local property. One of the main advantages of looking into the local market is that you know the economy inside out. At any rate, you may at least be familiar with the market. When you operate locally you will also find it easier to meet potential clients.
Plus being able to keep an eye on the property at all times will keep your mind at ease. Be that as it may, certain urban areas in England continue to a strong hub for renters. Even the steady influx of students in some of these regions has contributed considerably to rental yields for landlords. Also, before taking the plunge, connect with local agents to get a clear picture of the property industry. You will from all the vital details including property trends, locations in demand and rental charges.
Should I buy a new property or an old one
Statistically speaking, new rental properties find tenants faster than old ones. The fact that all new properties in the UK are granted 10 year home warranty will always incentivize prospective tenants to prefer renting out a new property. Besides, any defects that may arise in the span of the first two years will be taken care of by the builder. That’s right, you won’t have to spend anything. From then, onwards the warranty will take care of numerous issues like structural defects, maintenance repair and plastering. As for older properties, yes they come cheaper but it’ll require some investment on your part to restore properties into rentable condition. On the bright side, you may be able to give the property a budget facelift and in the process improve the value of your investment.
Should you buy a flat or house?
The question of whether to invest in a flat or house is oftentimes a personal one. It all boils down to the amount of stress you can manage. In the traditional sense, owning a house will involve dealing with a good amount of maintenance largely because it usually comprises of outside walls and a roof. Hence, house owners are bound to be beset by lots of internal and external repairs. A flat, on the other hand, will have a set service charge. You should find out how much flat charges for monthly service, and if the charges vary from time to time. Currently, the two-bed flat is arguably the most popular model among tenants.
What would you want if you were a tenant?
Who would you like to see as your ideal tenants? Have you ever thought about their likes and dislikes? If your tenants are students, they may be looking for an economical but quality place in close proximity to their school or college. Young tenants from white-collar backgrounds usually seek places that are sophisticated and stylish. Families prefer to have their property located nearby a reputable school. They want to personalise their home and make it look like an extension of themselves. If they manage to pull it off, they might just never leave your property. Do not hesitate to run a background check on your prospective tenants as it will help you eliminate the risk of letting in unreliable tenants into your property.
How good are your transport links?
No matter where you are planning on buying your property, you must find out if the location has access to all the major transport links. The easier the access a location has to public transport, the greater its appeal to prospective buyers. Transport accessibility is certainly a unique selling point for landlords. Most people prefer rental properties that lie close to public transportation. See if the location of your choice has any transportation projects in the pipeline. Properties in such a location will see a hike in market value and rental charges.
“haggling over the sales price”
Remember, you are a first-time buy-to-let buyer in the lookout for a profitable property. Keep reminding yourself that you are in a good position to negotiate a cut on the asking price. Don’t be ashamed to haggle over the price figures that seller throws at you. Always keep in mind that you buying the property to rent it out, that you aren’t going to stay in the property. It’s an investment for you.
Working out rental yields and capital gains
Prior to even considering investing in a property, you should do some math to figure out how much you will earn as monthly rent. Also, while factoring in the affordability take into account factors like agent fees, potential and repairs. When laying out plans for property investment, not many seem to think beyond the figures of rental yields. While rental yields form a major part of your return of investment, capital gains are something you should start looking into in the long term. For instance, many investors benefit considerably from identifying and investing in promising areas that could undergo price increases.
There is a lot of money to be made through property investment. We are privy to stories about people turning their lives around because they knew who to look up to, and where to invest in. Talk to property experts at Snippie and get professional tips so that you would know where to invest your money.