The current financial climate isn’t helping savers and the stock market is volatile. In the media you can’t escape stories of high demand for rental property and how landlords are making money from buy-to-let investments; but how do you go about becoming a landlord or if you have started how to build a property portfolio?
The following guide outlines some simple steps to take if you want to become a buy-to-let landlord.
Know your market
It may sound obvious but knowledge is vital to a successful buy-to-let investment. With the right information you will be in a better position to negotiate a good purchase price, buy a suitable rental property and keep costs to a minimum whilst maximising your return.
When you view a property put yourself in the shoes of your tenant, what are they like? What do they need from a home? Which areas are desirable? For example; young professional people are likely to want good travel links, a vibrant nightlife and enough room to flat share; whereas a couple starting a family have very different requirements.
Understand the Numbers
As the owner of rental property you will need to be on top of your budget. Take advice on how to set up your investment before you spend any money. A good accountant will be able to advise you on how to ensure your investment is tax efficient, and that you are claiming all the tax back that you are entitled to.
A good understanding of bookkeeping will stand you in good stead. Keeping track of your income, outgoings and the running costs of your portfolio from the start could save you a lot of money.
Remember this is a Business not your Home
Remember that you are investing in a buy-to-let property to make money; you aren’t making a home for yourself. The aim is to purchase a property below the market value. Much of this is down to experience; the more negotiations you are involved in the more you will see where you can save money legitimately, without using stubbornness as a negotiating tool. Remember, some homeowners have refused offers because of the negotiation tactics used by an investor.
Know your own Worth
You are in a strong negotiating position, especially in the current climate. Like a first time buyer you don’t have a property to sell. This is very attractive to vendors looking to avoid the problems associated with a long chain. This allows you more room to negotiate a good purchase price, but don’t over use this tactic.
There are Downsides
Careful planning can overcome many of the downsides to being a buy-to-let investor. You will need to have good contacts with trades people if you are going to manage the let yourself; you may also need a bookkeeper and accountant. However you may save yourself time, money, and have less stress by employing a letting agent to manage your portfolio.
There will be unforeseen costs to manage and you should also plan for “void” periods. These are the times when your property is not rented and therefore not bringing in a rental income. The Property Centre’s Diamond Service offers you peace of mind as it provides you with guaranteed rent.
Preparation Prevents Poor Performance
Or to use another cliché “fail to plan and you plan to fail”.
We can help with all aspects of building a buy-to-let portfolio, including finding properties that maybe a suitable investment, advising on the likely rental income of a property and providing advice on financing your buy-to-let. We can also market your property, identify and vet potential tenants and manage every aspect of the rental from check in, property visits and check out.
If you already have a rental property you can register as a landlord or if you are considering letting a property you can request a free market appraisal. Alternatively you can contact our lettings department on 01702 337 120.