Monday, October 10, 2016

The Key Questions to Ask Before Investing in Buy-to-Let

points before investments
When you invest in the buy to let market, you are, in essence, running a business. In this sense, it is unlike many other investment platforms, which are a lot more hands-off. With this in mind, there is a lot to consider and many questions to ask yourself before you invest a penny. In today’s guide, we’re going to go through some of the key issues that should be at the forefront of your mind.

Is it the right time?

Buy to let investment is a great long-term plan for making your money work harder. But there are no guarantees. There are a lot of responsibilities to consider, all of which take a lot of time. You will need to balance the commitment of looking after your investment with work and family duties. Chasing rent, arranging repairs and all the other things involved with buy to let is a major time commitment. If you are busy in other areas of your life, it might be worth holding fire for the time being. You can get help from lettings agents, of course, but this will come at a cost to your profits.

Is it the right place?

The location is everything when it comes to buying to let properties. Your aim should be to seek out buy to let properties in up and coming areas, where you can buy cheap, and sell on at a later date when the value increases. Doing this will also give your income a boost, as you will be able to raise your rents as the average rental price increases over time. This is all dependent on rising house prices, of course. But in general, terms, if you do enough research you will be able to identify the right areas that big developments are starting to appear in.

What sort of tenants do you want?

Happier tenants tend to take care of their homes a lot more than those who feel they are getting a bad deal. So, while you might feel that maximising your space and filling up the house with students, for example, it isn’t always the best choice. They will have void periods over long stretches of time, too, meaning your income will drop significantly over the summer. As long as you can balance your books, you should have no problem, but it is something to bear in mind. The safer option is to rent out to families. They will be looking for longer term periods of renting, and tend to take care of the properties a lot more. The important thing to remember is that all of your tenants will have different needs. It is your job to deliver a home that answers each of them.

Are you getting the income you need?

Of course, the idea behind all of these considerations is to ensure you are making enough money. You will have mortgage repayments, maintenance costs, insurance and a lot more besides to pay out every month. You will also need to set aside some money to pay tax on any profits. It’s also important to remember that property values and rental prices can fluctuate a lot. With this in mind, you should always be on the search for more properties in different areas, to protect you against any losses.

Hope this guide has helped - good luck with the buy to let investment!

No comments: