10 tips for buy to let success
1-Buy a property that is not very old and tired
This will mean less maintenance down the line. As lovely as a period two-bedroom house sounds, you’re not going to be living in it. Do not get carried away about any purchase as a home. It is a business deal.
2-Buy the type of property that is most “lettable”.
Two-bedroom houses and flats are ever popular and appeal to the widest range of potential tenants, especially those who are finding it tough to get on to the property ladder. Avoid large family homes, which appeal to fewer potential tenants.
3-Don’t restrict yourself to your own immediate area
Don’t restrict yourself to your own immediate area but research others Remember, you are not purchasing to sell again in a year. You will probably own the property for the rest of your life, so concentrate on getting the best rate of return on your money.
4-Make sure the area has a healthy market for tenants.
Be shrewd about the exact location of the property within your chosen town or city. Convenience is a useful factor. Being within walking distance of shops, railway stations, the town centre and so on will ensure that your property is high on the list of desirable places to live for tenants.
5-Try to avoid run-down areas.
Quite simply, this will have a direct relationship with the type of tenant you will attract – and poor-quality tenants will cost you money.
6-Do not give the game away
When you are viewing a property as a possible purchase, do not give the game away to the sales agent or vendor about how much you like the place. It will work against you at the offer stage.
Instead, remain polite at all times but do not be afraid to ask questions if you spot any snags. A bit of damp or condensation? Ask if there has been a previous problem. The same with wiring, wall cracks or anything that doesn’t appear quite right. Present the question nicely and without looking as if you are picking holes. Even though you may be perfectly aware there is no major damage or problem, you will have the vendor thinking about these points when it comes to your offer.
Remember, they need to sell and they want your money. A lower offer may get accepted if you have given no indication of how much you want the property.
7-When making an offer on a property, be patient – but ruthless.
As an investment buyer, you are not in a chain and can move at speed. This has value to the seller, so be prepared to walk away if you are not getting the deal you are after. There will always be a similar opportunity and a more willing vendor to do a deal.
8-Using a mortgage makes your money work harder.
Whether to go interest-only or repayment is a personal decision, but a rental income high enough to cover a repayment mortgage is a good indicator that you are getting things right. Take out a fixed rate if you are uncomfortable about the chance of interest rates rising, although you will pay a premium.
9-Most investors use a management agency to manage their property.
Now, just about every high street estate agent operates a letting service, and there are also many independents competing for landlords’ business. Shop around and drive your costs down by negotiating.
You should be able get a property management fee of between 8-5pc – or even lower if you have several properties to offer
If you want to let and manage your property yourself then go for it – but do it right.
10-Watch out for add-ons that some management agencies try to get away with.
For example, let’s say one of your properties needs maintenance. Some agencies will try to charge an “admin fee” to organise it for you. Do not accept this. You are already paying a monthly fee and this should cover the organisation of maintenance and repairs.
Also check the price of services such as carrying out an inventory and handling a change of tenant. Again, some agencies are a little too creative when it comes to invoicing. Agree on a rate at the start for all administration costs and make sure the agency sticks to it.
When you get your monthly statement from your managing agent, any maintenance work that has been carried out should be listed. Ensure that you receive a copy of the invoice from the trader or company that carried out the work so you can check that the charges were fair. If you know a cheaper plumber or electrician, for example, ask your agent to use them for future work. They can and should do so.
Please contact Pelin Martin for property management enquiries on 0208 994 7327 or on firstname.lastname@example.org