Buying to let can be a very good money spinner, but planning is needed to make it a good investment. Renting can also be a minefield.
Check out our guides to getting it right:
Before you start looking at properties, make sure you know what you're getting into. Look at all the risks involved. Property is a long term investment, so you need to consider whether you can afford to have money tied up for this long. You also need to think about what happens if house prices fall further and whether you'll still be able to afford the property.
When you're researching areas, it's essential that you think about whom your potential tenants are and where they want to live. This isn't going to be your family home, so you need to forget about your own preferences. Look at the local transport links, schools and amenities and how these factor into the lives of your tenants.
Before you commit to an investment, you need to ensure that it's affordable. Look at the price of local properties and the possible rental income to see if the figures add up. A good guide for buy to let investors is for the rent to cover 125% of the mortgage, as this provides a buffer if the property is left empty at some stage. Mortgage deals for new property investors will require larger deposits (usually around 25% to get the best deals) and arrangement fees can cost more.
Make sure you look at all the mortgage products available - don't just opt for the first one you find. There are organisations online that list details of the best buy to let deals. It's also worth considering using a specialist broker who can look across the whole market and might have access to exclusive products.
You always need to keep your potential tenants at the forefront of your mind to ensure that it's a property they want to live in. Decide on who you're aiming for. For example families will be looking for something very different from students or single people. Deciding on your target market will help you to focus on exactly what type of property you're looking for. The best types of tenants are those who want to stay for a considerable period of time and make the property their home. However, you also need to think about what will happen if you have unreliable tenants and how the tenant’s eviction process works.
As a buy to let investor you're in an excellent position to negotiate on the price of the property. With no onward chain there's less potential for the sale to fall through and you might be able to move faster. When you find the right property, make a low offer to start with and don't be tempted to pay too much.
When you're entering the property investment market, don't just think about the positives. Consider the negative aspects, including whether your investment will still work if prices fall – or demand drops. You need to think about what will happen if the property is empty for long periods, you need to start a tenants eviction process or the property needs essential repairs.
Will you want an agent to manage the property or will you deal with everything yourself? Midland Housing Ltd will take care of advertising, viewing and organising repairs. We will also be dealing with tenants for you - which can be a big plus. Please read upon our management services for a better outline.