Tips for Landlords


These tips will help you on your way:

Research your market 

If you are new to buy to let make sure you know the risks as well as the benefits. Decide how your Buy to Let should benefit you, whether you are looking at high initial yields, long term capital growth, or a balance of both. This will have a huge bearing in the area and property you need to be looking at.

Talk to as many investors in property and letting agents as possible to widen your knowledge and understanding of the business you are looking to become a part of.

Always get second and third opinions on rental values and property prices as these can often be inflated by selling agents to make a property more attractive when working out rental yields.

Choosing a promising area

Promising does not mean the most expensive or cheapest. Promising means a place where people would like to live and this can be for a variety of reasons.

Where in your town has a special appeal? If you are in a commuter belt, where has good transport? Where are the good schools for young families? Where do students want to live?

Asking yourself these questions might sound over simplistic, but they are probably the most important aspect of a successful buy to let investment.

Do the math’s

Before you think about looking around properties sit down with a pen and paper and write down the cost of houses you are looking at and the rent you are likely to achieve.

Buy to let lenders typically want rent to cover over 125% of the mortgage repayments and many now demanding 25% deposits, or even larger, for rates considerably above residential mortgage deals. The best rate buy to let mortgages also come with large arrangement fees.

Once you have the mortgage rate and likely rent sorted, be clinical in deciding will your investment work out?

What will happen if the property sits empty for a month or two? These are all the things to consider. Make sure you know how much the mortgage repayments will be and if it’s a tracker allow for rates to rise.

Don’t be over ambitious when working out your rental yields, take into account all costs.

Shop around and get the best mortgage 

Do not just walk into your Bank and Building Society and ask for a mortgage. It sounds obvious but people who do this when they need a financial product are one of the reasons the Banks make billions in profit.

If you are looking for advice consider using a specialist buy to let mortgage broker. Remember asking them for information means you are under no obligation to use them.

Think about your target tenant

Instead of imagining whether you would like to live in your investment property, put yourself in the shoes of your target tenant.

Who are they and what do they want? If they are students, it needs to be easy to clean and comfortable but not luxurious.

If they are young professionals it should be modern and stylish but not overbearing.

If it is a family they will have plenty of their own belongings and need a blank canvas.

Remember that allowing tenants to make their mark on a property, such as painting, or adding pictures or taking out unwanted furniture makes it feel more like home – these tenants will stay longer, which is great news for the Landlord.

It is also possible to take out an insurance policy against your tenant failing to pay the rent, usually known as the rent guarantee insurance. This can cost as little as £50.00 and is available as a standalone product from a specialist provider, or as part of a wider Landlord insurance policy, available from, This is money’s Landlord insurance finder.

Remember if you are buying with a mortgage rent to property price yield will not be the return you get.

Don’t forget tax, maintenance and other Landlord expenses such as lettings and agency fees, insurance, ground rent and service charges as well as general safety checks as these can quickly eat away all your profit.

Consider looking further afield or renovating a property

Most buy to let investors look for properties near where they live. But your town may not be the best investment. The advantage of a property being close by is being able to keep an eye on it, but by employing an agent it allows you to look further afield as they take care of everything for you.

Cast your net wider and look at towns with good commuting links that are popular with families or have a sizable university.

It is also worth looking at properties that need improvement as a way of boosting the value of your investment. Tired properties or those in need of renovation can be negotiated hard on to get at a better price and then spruced up to add value.

This is one way that it is still possible to see a solid and swift return on your capital invested. However, remember to ensure that the price is low enough to cover refurbishment and some profit and that you allow for the inevitable over run on costs and empty periods to carry out further maintenance should also be taken into account.

Haggle over price 

As a buy to let investor you have the same advantage as a first time buyer when it comes to negotiating a discount.

If you are not reliant on selling a property to buy another, then you are not part of a chain and represent less of a risk of a sale falling through. This can be a major asset when negotiating a discount, especially in a competetive market such as the one we have now. Make low offers and do not get talked into overpaying.

Consider how hands on you want to be

Buying a property is only the first step. Will you rent it out yourself or get a agent to do so. Agents will charge you a management fee, but will deal with any problems and have a good network of Plumbers, Electricians and other workers if things go wrong.

You can make more money by renting the property out yourself but be prepared to give up weekends and evenings on viewings, advertising and repairs.

 

Next Home Limited can give advice relating to all of the above as well as giving you our honest opinion relating to properties on the market both with ourselves and other agents. This is a free service and we will always be more than happy to assist you in any way we can.