Buy To Let? Here Are The Top Ten Hints To Help You Get Started

When you are setting yourself up as a buy-to-let property investor, you may imagine that it is a good way to make lots of money but there is a lot of things to look out for an avoid. This top ten list will help you avoid losing money and get you on your way up the property ladder.

1. Ask yourself 5 questions

i. Do I have enough spare time?

ii. Can I seek out the right information?

iii. Am I willing to consult others for help and advice?

iv. Am I willing to accept the risk involved in securing a business deal?

v. Can I accept responsibility on safety issues?

Hopefully you have answered yes to all 5. If you have, read on!

2. What am I good at?

There are several different types of property investor. Some are good at the DIY and repair side of things, others are able to communicate well and some can handle the figures. Really you want to be good at all three but everyone isn't perfect. Consider what your strongest points are and what you are weakest at. Then make the decision to either try to build on your weak points or consider hiring someone to help you.

3. Raise the cash

A surprising fact about by-to-let is that you can start with very little money. The key is to have a good understanding of the financial products available to you. If you don't have a lot of personal funds to invest, consider the 100 per cent loan -to-value residential mortgage.

4. Find the best buy-to-let mortgage provider

Although it may be tempting to purchase a property outright without a mortgage it is generally not the best idea for buy-to-let investors. If you have enough money to buy the property why not take a mortgage on it and use the remaining cash to purchase other properties and build up your portfolio. And always use an interest only mortgage as it will keep your monthly payments much lower and will allow you to accumulate cash for further investments. Lastly always make sure that your rental income will cover your mortgage costs and other costs!

5. Finding your first property, in the right area.

Many by-to-let investors choose a property that is close to there own home so it is easy to keep an eye on. Whilst this is good, it is always a good idea to choose a property that could be in a different town but have good commuter links or are popular with families or have a large university nearby. Another way to think about which property to purchase is the street that it is on as it is never a good idea to purchase the best house on a poor street, remember you can always improve the house but you can not improve the street. So consider buying the worst house on a good street.

6. But don't spend unnecessary amounts refurbishing it!

You may think that your taste will suit everyone else's, but the sad fact is your wrong. When refurbishing the property remember to go for neutral, simple colours and designs. This will help you get more viewings by potential tenants and they won't be put off by weird and wonderful designs. Remember, they will want to make it into their home when they move in. Also remember to furnish the property for the type of tenant you are aiming for. For example if you want to rent your accommodation to students remember to make it comfortable and easy to clean, but for a family then it really should be a "blank canvas" as they will have there own belongings.

7. tenants, choosing the right ones.

When you are thinking about which house to buy it is always a good idea to have a think about what type of potential tenant will be living here and there are several different types in the UK.

• People on hosing benefit
• Professional sharers
• Students
• Corporate
• Couples
• Recently divorced or split
• Criminals

The last type has probably shocked you if you haven't done any research into the potential tenant group market yet. It's a sad fact but also a true one and is something to watch out for when interviewing potential tenants. As already stated when choosing the property and furbishing it always have an idea of what type of tenant you are aiming for.

8. Minimise void/down time.

Always try and have your property lived in. Any time that it is empty is just wasting you money. It should only be empty if you are making improvements or repairing anything that is needed. Of course the key to minimising down time is to have neutral decoration and purchase properties in high demand areas. Also when the current tenant gives you notice that they will be leaving the property, start seeking out the next tenant right away.

9. Expand your portfolio/ One is good. More is better.

Owning only one property is easy but won't bring in a good return for the work that you put into it. By owning more then one property, and learning the key to releasing equity in your properties through remortgaging. Be careful though. Owning more then one property can bring you more money but the risk if not managed properly.

10. Agents help when your portfolio grows.

When you have started to collect a few properties into your portfolio you will find that it is very difficult to manage all your time between them. This is when an agent will help, especially when your properties could be outside your local area. Agents will help you with sourcing tenants, collecting rent and undertaking any repairs that may be needed on the property.

Keywords: