Get to know us and follow our latest adventures both in the office and further afield
How To – Starting As A Buy-To-Let Investor
September 18, 2014Article by Justin Aldridge
It is important to know what you want from a buy-to-let investment and it is crucial that you understand that it is not just a one off arrangement and can be an incredible responsibility. Becoming a buy to let investor involves a number of risks; however the potential gains can often outweigh these risks. Preparation is important when it comes to starting off as a buy-to-let investor.
1. Do the Research
Proper research is paramount to being well prepared when starting off as a buy-to-let investor. By taking careful note of the housing market, checking rising and falling housing prices, the demand for rental housing etc. you can start to predict a possible pattern and can then buy at the opportune time.
2. Think about your target audience
Are you planning on renting to single people? A couple? A family? Students? It is important to consider your target tenants as this will greatly affect both the style and condition of the property and your prospective relationship with your tenants. For example, renting to students can be cost effective but involves a deal of risk as students are only temporary tenants at best.
3. Think about your Location
If for example your ideal property is near a school it is unlikely that you will get a lot of single applicants for renting. Consider the local area and list the pros and cons of investing a property there. Is it near a train station? Is there a stable internet connection? Is there parking readily available? These are the sorts of things that your prospective tenants will look for, so it is good to scout ahead the local area to find out ideal locations.
4. Haggling is important
The asking price is generally a guideline and if you’re willing to take the risks, haggling for a property you’re keen on can reap some great rewards. As a buy-to-let investor you are in the ideal position to be haggling as you are not part of a chain and are not looking for a property to move into. There is little risk involved in the sale falling through and so you can afford to be more frugal with your offers.
5. Decide on how involved you want to become
Before you start it is important to decide whether you would like to work on a personal level with your tenants or whether you would like to choose an agent who will deal with tenants for you. There are benefits and setbacks to both of these options.
Dealing with tenants yourself allows you to build a personal relationship with your tenants however it will require a lot more work on your behalf. Delegating to an agent will free up more of your own time, however agent’s fees will cut a slice out of your rental profits.
6. Cast a wide net and look at all types of property
Do not try to snap up the first house or flat you like the look of. Many first time buy-to-let investors only look in their local area and this can be their downfall. Cast a wider net to look at nearby towns and villages, be flexible!
Try looking at several different types of property. Flats and houses differ greatly in quality and what may seem like a rundown flat may be an ideal investment with a few months of refurbishment work. Imagine what you can do with a space instead of hoping that a flat or a house will come along that needs no work done. Your return investment will be well worth the costs, plus more worn down properties will be on sale for a lower asking price than ready-made properties.
There is no guaranteed way to suddenly become a successful buy-to-let investor and many big time investors have gotten to where they are today by taking a lot of risks and investing their personal time and effort into their rented properties. It is not a fix-all solution for investment! Buy-to-let properties require a lot of constant work, however when all is said and done it can be a significantly beneficial form of investment to engage in, particularly if you do all of your research.