A Beginners Guide to Buy-to-Let Property Investment

With the housing market finally looking like it is turning a positive corner, investing in buy-to-let properties could once again be a viable option for those looking to make their future more secure. However, if you are planning to delve into the world of property investment, there are a number of things you should think about and plan.

Research your location before you buy

It’s so important that you are able to think like a local and know the area you are planning to buy in like the back of your hand. Never purchase a property in an area if you are unsure about the type of housing, the kind of people that live there and what kind of amenities might attract people to rent in that particular location. Make sure that you are only buying if other homes in the area are valued at, or have been sold recently at a similar price. If you are concerned, perhaps consider buying your first two or three properties in the town you live in.

Think about your target market

Bringing in the rent can be great, but you need to consider how much you want to make and how much risk you are willing to take. For example, you would make by far the most money from buy-to-let investing by renting your property out to students, as it allows you to let on a per-room basis. However, would you be willing to take the risk of the property being damaged, or upsetting the neighbours? Whilst professional people or couples often make the safest tenants in terms of risk, you may not be achieving the yield you want against your mortgage. Try to weigh up the pros and cons of all of your options before coming to a decision – it may be that you want to try a mix to see what you are comfortable with.

Get your finances in order

Don’t be afraid to start off slow with property investment. Eventually you could find yourself with multiple mortgages to pay, as well as rents coming in from your various tenants, so it’s important to stay on top of your finances. Stay friendly with your bank manager to ensure you can get the best deals on mortgages when considering a new property investment. Also look into bridging loans in the event that a house comes onto the market that is too good a deal to miss. “What is a bridging loan?” I hear you ask. Well, it’s a way of getting the finances in the short term before your mortgage lender finalises the pay-out, and can be very useful in these kinds of situations.

Do you want to be a hands-on landlord?

The last point we want to make is whether you want to be a landlord who deals with the tenants in a hands-on way, i.e. taking the rent payments, checking the property on a regular basis and doing viewings, or whether you want to leave this to a lettings agency. If you have get to the stage where you have multiple properties on your books, you will find that being hands on can take up a lot of your time, to the point where it becomes your full-time job. Leaving it to a lettings agency, whilst coming at a cost to you, would allow you to deal with the business side of things, as well as continuing to make further investments. Again, it is a case of weighing up the pros and cons of both options.