Ten tips when buying to let
brought to you courtesy of moneysupermarket.com

Buying to let is typical of all investments in that it is a risk: Your return depends hugely on the financial climate at the time, and you are not guaranteed to make a profit. However, if bricks and mortar appeals to you more than stocks and shares, there are a number of things you should probably consider.

• If you’re new to the market, make sure you research it thoroughly. You need to be sure that buying to let is the right thing for you, as a lot of money goes into such ventures; and your money may perform better if it’s doing something else.

• Choose your area carefully – and by this we don’t just mean the most expensive or the cheapest. Ideally you want to find somewhere that has a good spread of amenities, and is well priced when viewed objectively. Things like the proximity to local schools, shops and employment centres should be your first consideration.

• Before you go out viewing properties, it is a good idea to take some time to sit down with a pen and paper, and work out how much the properties you are considering cost and the amount of rent you hope to charge. Most buy to let mortgage lenders look for rent to cover 125% of the mortgage payments, and often want a 15-25% deposit as well.

• Shop around. There is a huge number of buy to let mortgages available, and shopping around or using a price comparison site like moneysupermarket.com can often make the investment work that little bit better right from the get-go.

• Consider the sort of person you would like living in the property, then ask yourself whether they would like to live in your property in the first place. For example, if you want to attract families, then a one bed apartment on a busy street isn’t going to attract them.

• Be realistic in your aims. Due to the current financial climate, you should not expect any short-term financial growth. At the moment, you should be looking at making income from rent above all else, as house prices are not jumping as much as they used to. Plus, if you are paying your mortgage on an interest only basis, if you’re making a good return you should be able to build up a decent fund reasonably quickly to invest further.

• Don’t be narrow-minded. A lot of buy-to-let investors only focus on the area they live in, and often this isn’t suitable for the people they want to target. Don’t be afraid to travel a few miles for a property.

• Be prepared. What happens if your property is empty for a few months, or house prices take a sudden dive? Don’t forget that repairs are your responsibility as well, and as such a good landlord’s insurance policy will help. moneysupermarket.com says “As a landlord, you are responsible for the bricks and mortar of your home so getting adequate buildings insurance in place will be your responsibility. Even if your property is let unfurnished, it's still advisable to have contents cover for things such as carpets and curtains.”

• Consider how ‘hands on’ you want to be. Will you deal with the letting yourself or let an agency deal with it? Are you going to do repairs yourself, or get workmen in? while you stand to make more money if you do the work yourself, be prepared to lose free time in viewings, advertising and repairs.