These days many people choose to put their money into property as a way to help secure their financial future. Now while investing in property to rent out might seem like a good way of providing yourself with a steady income, it is not without its pitfalls. Renting out property carries with it a certain amount of responsibility. You will be responsible for the upkeep of the property and ensuring it is in a habitable condition for your tenants. As we know there are lots of things that can go wrong with houses and if you are to maximise your income the last thing you need is to be constantly paying out for repairs. So, there are a number of things you should do before you go ahead with any purchase to make sure the property you are buying is fit for purpose.
When you buy a property to rent out the last thing you need is for it to be standing empty. Every week your property is without tenants is a drain on your finances. Unfortunately not all tenants treat rental properties as if they were their own, and you may need to be prepared to deal with damage to the property, and in the worst cases unpaid rent.
So, the purpose of this article is to try and guide you through the minefield that can be often ‘buy to let’. Below we have outlined five tips that can keep the problems that are typically associated with owning a rental property to a minimum by taking the correct precautions before you buy.
Location, Location, Location
At the risk of sounding like a channel 4 TV programme, location should be right near the top of your list when choosing a rental property. This is because it will be a key component when it comes to attracting tenants. The first thing is to familiarise yourself with the local area as it will play an important part in deciding the type of tenant you are likely to attract. Try and take into account the distance to schools, supermarkets and shops and other local amenities. Without doubt another essential thing to consider especially in London are the public transport links. Many people decide to travel round the capital by public transport because it is often quicker and much more convenient than using the car. So, always look at things like the location of the nearest tube or railway station or bus stops. If you are thinking about a student let, it is also indispensable to look at the position of the property in relation to local colleges and universities.
Type and Condition of the Property
When choosing a suitable property you should take time to think about what your goals are. As with location the type of property you choose can also influence the type and quality of tenant you are likely to attract. If you are looking for single professional people or young couples then a flat could be ideal, however if you aim to target families than a house would probably be a better bet. When choosing a property you should consider maintenance costs, while older properties may be full of character and can sometimes be cheaper to buy, they are often more expensive to maintain. One thing that is certain is that you should do all relevant checks before making your purchase. While things like structural surveys are mandatory, a check of the drainage system is not. So, before completing any purchase our advice is to contact a company that deals with blocked drains in London and get a full homebuyer drain survey performed, in order to ensure that the infrastructure of the property is sound.
Personal Preferences Should be Put to One Side
When you buy a house intending to rent it out especially if it needs some work it is vital that you take a practical approach. Remember the purpose of the exercise is to help provide you with financial security. While things like quality kitchens and bathrooms are a good selling point when renting out a property décor quite typically is not. So, before you start shelling out on expensive furnishings and décor take a step back. It is always advisable to keep a rental property as neutral as possible to allow it to appeal to as wide a market as possible.
While renting out a property can be ultimately rewarding it doesn’t come without a degree of financial risk. There are certain costs routinely associated with renting a property, and they can be budgeted for as a matter of course. But when buying a rental property you should always make monetary provision for unexpected problems that will undoubtedly arise. Things that should always be factored into your calculations include, maintenance costs, renovation, tenant free periods and legal costs.
The better prepared you are and how you control your finances while buying the property and getting it ready for renting out, the more successful the project is likely to be. One thing that is really important for any landlord is to have the appropriate insurance cover. This will protect you in the event of unforeseen repairs being needed, tenant damage whether that is accidental or malicious, unpaid rent and a host of other issues. So, it is imperative you have the relevant landlord insurance in place before your tenants take possession of the property.
Now when you buy a property to rent out you are probably not thinking about selling it, as the aim is to secure a regular income. However, in a property market as volatile as London things can change quickly, and there may come an opportunity to turn a quick and not inconsiderable profit. So, while it is not the primary concern when looking for a property, resale value is definitely something you should take into consideration.
Hopefully the points we have made above will be helpful if you are thinking about dipping your toe in the buy to let market. There are other considerations as well but taking the ones we have mentioned into account will certainly help you. It is important that you do thorough research before buying any buy to let property, to ensure you have the best chance of a long and successful project.