There have been several studies published recently which clearly illustrate that investing in a buy to let property is still one of the best asset classes to hold.
But if you are new to buy to let property investing, what are the steps to success?
Buy to let property – the tips for success
This is our brief guide to help new buy to let landlords (and some established ones too!) get to grips with what has to be done.
Firstly, research is key to buy to let success.
This means that a buy to let investor should compare carefully the likely rental income from a potential area and then compare property prices. This will help them determine how much the yield, or profitability, of their investment will be.
However, in the process of checking this information it might be wise to avoid an estate agency, particularly if they have a letting agency attached to it, since their information may be biased.
The most obvious advice, and this will save a landlord money in the future, is to buy a property that will be easy to rent out all year round. This means that you will have fewer, or no, void periods which are spells when the property is empty and no-one is paying rent.
Buy to let investment – do I need a letting agent?
A new landlord can also save money by running the tenancy themselves or pay the reasonable charge by a letting agency and let them run it – this may well be money well spent since they will have the experience and expertise to ensure that the landlord meets their legal obligations.
A letting agent is also invaluable should the tenancy run into problems and the tenant needs to be evicted.
It's also vital that a landlord with a new buy to let property understands that a normal property insurance cover will not be valid. This means they will have to take out a specialist insurance that will cover their contents and building.
Most insurance companies offering cover to landlords also include things like malicious tenant damage and help with legal expenses which should include the money spent on a repossession.
For those who think they may need it, there's also cover for lost rent income.
So while this blog is aimed at saving landlords money, we cannot stress enough that it is money well spent for carrying out full reference checks on a tenant. There are several referencing agencies available for this and some professional organisations offer it to, for example the National Landlords' Association.
The next thing a landlord should spend money on, in order to save money in the long-term, is to have a thorough inventory taken either by themselves, their agent or by a specialist firm of inventory clerks.
The inventory should cover the state and condition of every part of the property, the furnishings that are being included in the rent and take photographs too. Take lots of photographs.
It's this inventory which will prove to be an invaluable asset should the tenant make a complaint against their deposit though a landlord needs to be aware that they may struggle to claim for 'fair wear and tear' of items.
Finally, there are two other issues that new landlords should really appreciate. They must secure the tenant’s deposit with a legally registered scheme, such as MyDepositsand the letting agent will help with this.
The landlord should also take proper advice from an accountant since this is now a business arrangement and there will be a tax bill for the rental income though the landlord can offset their costs against this.
Ultimately, investing in a buy to let property can be a hugely profitable as well as rewarding experience though not everyone will make money doing it. Be careful and meet your legal obligations and the investment in a right area will pay dividends.
Also, landlords should keep up with various tips on how to save money by visiting this website on a regular basis.
