Buy to Let - Buying Property to Let Out
Buying property to let out is serious investment and should be conducted with some equally serious research. Here are some tips to keep in mind when buying property to let:
1 -- Right Property in the Right Location
Ensure that there is sufficient rental demand in the area where the property is located. Take advice from local agents and friends in the neighbourhood on the rent you can expect from a property that size in that area.
2 -- Mortgage options and the hidden costs
The cost of your funds shouldn't be too high if you want to profit from buy-to-let. There are various options offered by financiers for buying to let. Compare the options and the hidden costs involved with each option before finalising with any one banker.
3 -- Miscellaneous Costs
Don't forget to take into account the extra costs that would be needed in taking care of maintenance and insurance of the property.
4 -- Reserve Funds
Should the tenants default on rent or choose to vacate earlier than expiry of the lease deed, then you'd need to have sufficient backup funds to pay for the mortgage installments.
5 -- Choose the right letting agent
You could find a tenant on your own and manage the tenant on your own. Should you choose to go in with a letting agent, look at their reputation in the market. Their charges vary.
6 -- Lease Agreement
Have a lease agreement in place before a tenant occupies your property. Your letting agent or solicitor can help you with this.
7 -- Make sure you have the right insurance
As the property owner you have the responsibility of insuring the structure of the property, including any permanent fixtures and fittings. A range of insurance policies exist specifically for the buy-to-let market.
8 -- Sort out your tax position
Becoming a private landlord may affect your tax position and profits you earn from the property could be liable to capital gains tax, charged at the highest rate of income tax. Consult with your tax or financial advisor to find out the most tax-efficient way of running your buy-to-let.
9 -- Produce a detailed inventory before tenants move in
If you are letting a furnished property, always make sure the tenant signs a detailed inventory of all contents. This will help safeguard against any missing or damaged items that could be uncovered when they leave.
10 -- Always get a deposit
It is very important to get a deposit from your tenants before they move in. This will help to protect you against any damage caused by tenants or a default on rental payments.
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