With the current rental market booming, there has never been a better time to invest in a buy-to-let property. We’ve certainly seen investor interest increase in the last 12 months, and we hope that this continues!
I have taken several phone calls over recent weeks asking for advice on properties for sale and their potential for investment – and so I was prompted to write a blog to answer the questions I am asked most commonly.
Here are my do’s & don’ts for a buy-to-let:
- Think of buying to let as a medium to long term investment.
- Do your research. Seek advice from an ARLA letting agent regarding local market demands. The demographic for the area is important, if there is a direct train route to London, then ensure your property is within walking distance and that you are looking at properties which would be attractive to the commuter. If you are looking to accomodate families, then research local schools & suitable sized properties.
- Get your sums right. Will the rent cover borrowings and costs, after allowing for void periods? The most commonly asked question I find myself answering is ‘what is the yield on that property?’. To calculate gross yield:
Annual rental divided by sale price x 100 = x% gross yield
- Decorate, fit out and furnish to high quality standards, especially kitchens and bathrooms, to attract the best tenants and let quickly every time. New build developments are often good from this perspective, and are attractive to tenants for being brand new.
- Use an ARLA member as your letting agent. They are bonded, hold Professional Indemnity Insurance to required standards, have staff trained to ARLA’s competency standards and are kept up to date with the latest legal and regulatory requirements.
- Let personal taste cloud your judgement. Be sure the property you choose meets market requirements.
- Purchase anything with potential maintenance problems like a lot of woodwork or large gardens. It will add nothing to the rental value and cost a lot to keep up. Again new build developments will irradicate this problem. If you are buying a second hand property then ensure there are no large outstanding issues.
- Think that the running of an investment property to let can be left to friends or relatives in your absence. Tenants require a full management service. Although an investment for yourself; whilst the property is tenanted it needs to managed correctly and inline with current legislation.
- Use off-the-shelf tenancy agreements from HMSO or law stationers, or forget to issue the right notices or fail to have a proper inventory and condition report made before a tenant moves in. Leave all documentation to a professional agent.
- Furnish with second hand furniture or cast-off soft furnishings. These will probably contravene the Furniture and Furnishing Regulations. Your agent can advise you of this, and any other relevant legislation prior to instruction.
Give one of our offices a call today to discuss any options you may be considering. 01923 721900 / 01923 776400.