Buy-to-let: everyone’s talking about it these days, but what are the benefits – and how can you make it easier? Buying a property just to rent it out isn’t simply a smart way to earn extra cash, it can sometimes be a better investment for the future than putting your money into a savings account. So, if you’re ready to take the plunge and become a landlord, check out these five hacks to make it work for you…
- Location, location, location
Choosing the right area to buy becomes even more important when you need to ensure a regular rental income from your property. Do your research before you even start viewing – look for parts of town with a high rental demand. If you’re thinking of specialising in HMO properties, looking near a university or college would make sense. Or for company lets – try somewhere that’s on the commuter route to the business district. Think about where prices are going up, and look for accessibility, good transport links, local amenities and well-maintained common areas and stairs.
- Find your niche
When it comes to buy-to-let, specialising can make all the difference to your success. Choose a niche: HMO properties, student flats, homes for people who get housing benefit, or luxurious apartments for business people who have their rent paid by an employer… it’s up to you. What’s the advantage of doing this? It allows you to master and refine your model as you go. The more of an expert you become in your chosen area, the more profit you make and the better eye you have for the deals when they appear – meaning you can act fast to snap them up.
- Call in the experts
Choose a company that specialises in customers who want to buy a property as an investment – that way you can streamline the entire process. And keep an eye out for the kind of big personal service you only get with small. You might want to get the best deal on your new buy-to-let property, but that doesn’t mean to say you have to go with the biggest estate agent or solicitor on the block. In fact, with a smaller company with fewer overheads, you can often get the best of both worlds – personal service and competitive pricing.
- Decide on what you want from your property
Are you interested in a long-term investment or a rental income from your buy-to-let? These days, many savvy buy-to-let landlords invest for income rather than capital growth. After all, properties are usually bought with a mortgage, and add running costs, property maintenance and agent fees to this monthly payment and your return will be less. So if you’re thinking about a long-term investment, you need to consider if a buy-to-let still beats an investment fund or savings account once all these outgoings are taken into account. The most important thing is choose an estate agent that can help you to achieve your goals.
- Don’t rush…
Take it slow: it’s really important not to overstretch yourself. Whether you’re buying one property, or planning on building your very own ‘property empire’, it’s an exciting time but you need to be realistic about money. Breaking even and relying on capital growth is not a safe or advisable option: each investment must make you money or it quickly becomes a liability and a gamble on the market rising. It’s also wise to make time before you buy to create an emergency fund for unexpected repairs, or ‘void periods’ when you have no tenants.