One of the most attractive investments nowadays is buy to let property, but you need to consider many things before buying such a property. Our top tips for investing in buy-to let-property will be of great help.
As the name suggests, the buy-to-let property is the process of buying a property for the purpose of letting. It can be a long-term investment. However, it’s not similar to residential property and there are many factors to consider like the place, property type, and budget before investing.
Tips for Purchasing a Buy-To-Let (BTL) Property:
Let’s dive into the top tips whereby you can achieve the maximum advantage from the buy-to-let property.
It might not be a long-term investment if the cost exceeds the yields of the letting. It is crucial to work on the budget beforehand to avoid future pitfalls. You should know the total investments including, survey and solicitor fees, taxes, agency fees, and other maintenance costs while renting or selling the property. Taking the services of an accountant is advisable.
2. Investment Yield:
A buy to let property can be a long-term investment if it generates a certain amount of profit constantly. Like if the worth of your property is £150,000 and you’re annually earning £7,500 as rental income. In such a case, you’d be availing 5% yield. Here, you should work out all the costs associated with the investment to find out the right sum. Therefore, you should provide good rental services to your tenants for long-term benefits.
3. Look for Potential Tenants:
Before getting a buy-to-let property, you should research whether the property is affordable and accessible to potential tenants. You should be aware of the details of your potential tenants. Like are they students, professionals, or families. You might need to contact your mortgage company, as there might be restrictions for certain occupants and property types.
4. Research the Area:
Everyone likes the area with good transport links and amenities that’s the reason such properties are easily rented and they’re always occupied. You can get help from the letting agent near your locality to advise you on the best areas for letting. You should research property types and their rents. You can also visit the letting websites for help.
5. Internal and External Space:
Tenants like those spaces that are clean, simple and functional. Investing more in designer bathrooms and kitchen would not help, as prospective clients want a nice place with a decent look to live. When it comes to the outside space of the property, most people want a small and maintainable garden. Families might need a bigger garden, but students and bachelors don’t like such places.
6. Maintenance Cost:
Maintenance costs of some properties might be high. Therefore, go for a property that is easy to clean and maintained. New buildings might be good as they’ve less maintenance cost, but they need more money. A whitewash of an old cottage might be good but it’d be time-consuming. So you should choose something in between that is worth the investment.
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7. Property Condition :
The condition of buy-to-let property should be better than your own home. A substandard property with a bad wiring system, sanitation, and other issues might not be good for letting. Tenants don’t like to live in such places and you might lose the letting income. Therefore it’s necessary to do repairs where required.
There are certain instances where you might sell your buy to let property. Your property needs to be saleable to earn a gain from the time of purchase. So you should consider this factor while buying the property.
You should comply with the legal obligations from the taxes to smoke alarms and carbon monoxide preventers. To avoid future problems, you must take advice from a good letting agent. Your tenancy agreement should contain the required legal obligations and the details of tax issues.
Quick Wrap Up:
The buy to let property scheme can be a long-term investment if you consider all the above tips mentioned. You should add the stamp duty to the cost of your property and know the total property value as you need to make money. Unlike other investments, there are no consumer protection laws, so consider all the factors beforehand.
If you need help regarding the financial issues of your property, contact our certified accountants for help.
Disclaimer: This blog provides general tips of buy-to-let property.