Buy-To-Let is still seen as a financially viable form of investment and remains a popular choice! Whether you’re an existing landlord looking to expand your portfolio or looking to take the first steps in investment, here are our top tips for the ever-changing world of Buy-to-Let.
Do your homework
The buy-to-let sector is constantly changing. It is important to keep up to date with the industry and do your homework. Mortgage interest tax relief is currently being withdrawn in stages, to be replaced by a 20 per cent tax credit. You need to be able to adapt to the changes and to ensure you’re getting financial advice on your own tax position and the impact the changes will have. You should monitor industry news to keep up with new developments or hot topics to ensure you have all the latest updates.
Work out rental yields
The rental yield is the annual rental income as a percentage of the property value. Therefore, understanding the potential profitability will help you identify the types of properties and locations that will best suit your budget. Before you start looking for new properties, sit down with a pen and paper and think about your budget and the rent you are likely to get. Also, don’t forget factors such as maintenance costs or management fee’s if you’re instructing an agent on your behalf.
Location, Location, Location
Major infrastructure projects, as well as local developments, can greatly affect the money landlords can make on their investment. The current desirable areas for renters are usually well-known, but an up-and-coming area could be a great opportunity, so you might want to do a bit of background research. Think about whether a town would be good for commuters or is near well-regarded schools and if the area is popular with renters.
(See Why Invest in Leeds? Here)
Choose the right property
You will need to research the local market and get to know which areas are popular for different types of renters, such as families or students. For example, in town centres it may be easier to rent out a one-bedroom flat, whereas a three-bedroom terrace is likely to work better in a family neighbourhood. Also, think about your target tenants. If they are professionals, for example, they may be looking for a modern, stylish home, while families might want a bit more space.
Unless you are a cash buyer, you will need a buy-to-let mortgage. It pays to speak to a good independent broker when looking for a buy-to-let mortgage. They can not only talk you through what deals are available, but they can also help you weigh up which one is right for you and whether to fix or track.
You should still do your own research though, so that you can go into the conversation armed with the knowledge of what sort of mortgages you should be offered.
How hands-on do you want to be?
Buying a property is only the first step. Will you rent it out yourself or get an 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. If you choose an agent you do not have to go for a High Street presence, many independent agents offer an excellent and personal service.
It really pays to look after your tenants. Do this and they will look after you.
If you’re a landlord looking to extend your portfolio or a first-time investor wanting to get your foot on the ladder, contact us on 0113 244 0251/0121 516 2222 or firstname.lastname@example.org for free no obligation advice.
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