Considering a buy-to-let property as a means of stable investment, and actually going out and investing in a buy-to-let property are two very different process. While it may seem like an incredibly profitable investment – granted many people have made their fortune on BtL – it is important that you do not jump into things before having considered all the possibilities.
New buy-to-let investors would do well to look online for advice and assistance when choosing their ideal property, as this can be one of the largest investments you make in your lifetime. It is important that you choose wisely, or risk making one of the worst possible mistakes you can.
Choose a Promising Area
You want to make your property as attractive as possible to potential tenants. Ideal property locations are within walking distance of the town centre – not too close and not too far away – and within reasonable proximity to railway stations, bus stations and taxi ranks. For properties that are likely to attract families, proximity to local nurseries, schools and colleges is also important.
Consider your Target Tenancy
Depending on the location you have chosen, you will want to consider the types of tenants often attracted to properties in that area. Your safest type of tenants are couples or families in a long term, committed relationship with both spouses employed and contributing to the rent of the property. These tenants are more likely to provide a reliable source of income Then come single tenants in long term professional employment, new or young couples in employment, single professionals in short term employment, students and tenants on disability or housing benefit.
You will be able to determine the types of tenants who are likely to view your property by looking at the surrounding area and what it has to offer each sub-set of tenants. For example, a built up city area with a high employment rate is likely to attract young professionals looking to make their fortune. A city area with a college or university in close proximity is likely to attract student tenants or graduate tenants.
Avoid Fixer-Uppers for First Time Investments
Some property tycoons make a mint by buying old, run down properties, doing them up and then renting them out or selling them on for an arm and a leg. These people, however, often have money to waste and can afford to take a risk with such properties. As a new buy-to-let investor, you are better off investing safely and then gaining some profit before making a larger risk such as buying a run-down property.
Try for newer properties that are stable and secure, or older properties that have recently been renovated. If you are unsure you can always ask the assistance of a solicitor or chartered surveyor, as they will be able to offer expert advice on the condition of a property if you are interested in a purchase.
Consider your Personal Level of Investment
Do you want to have a personal relationship with your tenants, or would you prefer that an estate or property manager took care of everything? Whether or not you want to have a personal level of investment determines your need for a property manager. While they do charge their own management fees, it puts all responsibility in their hands; including sorting out repairs, insurance and the like. This can help to alleviate a lot of stress otherwise taken on by landlords and can help leave you to enjoy the finer things in life.
On the other hand, you will save money by conducting this business yourself. This does mean that any time the tenants find a problem, they will speak to you instead of a property manager. In some ways this can be beneficial, but if you have problem tenants that seem intent on breaking everything, you may end up in more trouble than your money is worth. Take each option with a pinch of salt and go with what you think will work best for your needs in the long run.
While buy-to-let investments can be a really profitable business if done correctly, there are a number of risks involved and if you just jump ahead without having read all of the fine print, there are so many ways in which you can get burned. There is no such thing as doing ‘too much research’ on a subject and if you are entirely unsure about a property, you can always take your money elsewhere; it is not the end of the world.
Article provided by Mike James, an independent content writer in the property industry – working alongside a selection of companies including London-based investment specialists Prime Centrum, who were consulted over the information contained in this piece.