It is very important that when choosing a buy-to-let investment property you allow your head to rule your heart.
Your investment property needs to appeal to a variety of people and not necessarily you. You might like floral patterns and prefer to live in the countryside – but that’s not necessarily going to get you a good return on your investment.
Here are our top ten tips for what to look for in a buy-to-let investment property:
1/ LOCATION, LOCATION, LOCATION – Properties near to town, good transport links and excellent school catchment areas are going to get the best rents and always be occupied. Speak to local letting agents and they will be able to advise you of the popular areas and types of properties that get the best rents.
2/ BUDGET – Work out your budget carefully and find out how much you can borrow. Don’t forget to remember to factor in insurances, agency fees, solicitor fees/cost of buying the property etc. Once you know how much you can borrow, you can then start researching properties and types of tenants you can attract.
3/ RENTAL YIELD – Make sure you do your homework. Search Rightmove for similar properties that you are looking at which have been recently let. Look at the quality of the properties and styles. You can also see when they were added to the site. A simple way to work out your rental yield is to take the rent i.e £1,000 PCM time 12 months = £12,000 divided by the purchase price i.e £250,000 times 100 = 4.8% yield.
4/ RESEARCH POTENTIAL TENANTS – Who is it you are looking to rent to will depend on the type of property you purchase. If you buy a two-bedroom flat then it will not be suitable for a family of four.
5/ INTERNAL SPECIFICATION – If your property has a new modern kitchen and bathroom it is going to help you rent your property quickly compared to a property that has an old-fashioned one. Spending money on the top of the range kitchen is a waste of money and unlikely to be of benefit to you unless it can be reflected in the rent and the type of property it is. Remember it is an investment and you will not be living in the property. Keep colours neutral and the fixtures and fittings clean and functional.
6/ OUTSIDE SPACE – Depending on the type of property and tenants, will dictate the type of outside space the property will have. If the property is a flat, there will normally be communal gardens but obviously, if it is a family looking, they are more than likely to want a garden for the children to play in. Keep it easy to maintain and attractive rather than overgrown and messy.
7/ MAINTAIN-ABILITY – Purchasing a new property will obviously cost you less to keep up together and looking nice. However, buying a new property will more than likely cost more to purchase. An older property might seem cheap, but it will more than likely cost you more over time with regular maintenance issues.
8/ SAFETY CHECKS – If you rent a substandard property i.e the electrics are very old and unsafe then you could be liable if something was to happen. Get these checked either soon after your purchase has gone through or better still before completion.
9/ DON’T BE OVER AMBITIOUS – Focus on the long term and allow the rent to grow over time, possibly to help fund another investment property. If you are unrealistic with the rent, your property will stay empty and you will be losing money.
10/ REGULATIONS AND OBLIGATIONS – Being a landlord comes with a lot of legal obligations. Make sure your gas boiler is serviced and a safety certificate is issued annually, smoke alarms and a carbon monoxide detector must be installed. Having a good letting agent will help as they can advise you and keep you up to date when new legislation are being introduced. Make sure your tenancy agreement is up to date and properly drawn up to protect you.
Owning a buy-to-let investment property is medium to long term and isn’t a get rich quick scheme. It also needs to be something that benefits you financially and doesn’t cause you any stress or worry.
We are happy to help and advise you in any way, give us a call on 01243 252984, email firstname.lastname@example.org or better still, pop into our office in West Street, Chichester for a chat and a nice cup of coffee.