Buying a property as a buy to let investment should be considered as a medium to long term investment. Ideal for those who prefer to invest in a tangible asset as opposed to stocks and shares. The main focus of a buy to let investor is to achieve the highest possible yield and most rental yields at the moment offer substantially much better returns than can be achieved through banks and building societies. It is also important to remember that the rental yield only takes into account the rental income. It does not consider the advantages of capital growth as the value of a property may increase during the medium to long term.
What is a buy to let investment?
It is where a property either residential or commercial is purchased with the intention to rent it out to achieve a profit. As the owner of the property, you can benefit from any increase in the property value, meanwhile, any rental income can be used to meet any loan payments if there is a mortgage on the property. When you buy a buy to let a property you become a landlord and you are required to understand your responsibilities as a landlord and the responsibility and duties you have to your tenants. For peace of mind and to protect your investment we would always recommend you use a professional letting agent like Filtons Stratford Ltd who can take care of all aspects of letting your property.
What area should you consider investing in?
It is important that you research the area thoroughly getting to know which areas are popular with tenants. Which schools are good and what the transport links are like.
What type of property makes a good buy to let?
The type of property you invest in will dictate the type of tenants it attracts and how much time or additional finances it will take to manage it. Some investors prefer to fully renovate a property when they buy it and some investors do not want this additional work they want ready to go properties. This decision is important as this can have dramatic effects on the yield you will receive.
How do you finance your investment property?
The two most important aspects of this investment are that it financially works for you and that the property appeals to the right tenants to maximise a good rental yield. You can purchase the property outright with cash and this will generate yield but will tie up your capital in the property or you could purchase the property with a special type of loan called a buy to let mortgage. This type of loan is totally independent to your own mortgage arrangements and is solely secured on the investment property.
What are the landlord’s responsibilities?
Subject to the terms of a contract, landlords are usually responsible for most repairs to a property’s structure and exteriors such as heating and water systems making sure that gas and electrical services are safe. Being a landlord can be a daunting thought especially if you lead a busy life so we would recommend you use a professional management company who can make sure that your property and your tenants get the service they need.
What should a landlord expect from a letting agent?
Your letting agent should be able to advise you on the achievable rent you could expect. The type of client your property will attract and how best to market your property. They should advertise your property through all the appropriate channels and when a potential tenant is found carry out thorough referencing and credit checks, collect the rent, advise you on any repairs required on the property, resolve any problems that may arise and make sure that the landlord is protected from any possible litigation by advising him on the correct course of action. For most Landlords, it can be simply “to make things run smoothly”.