From the right location to the ideal tenant, building a buy-to-let portfolio requires a lot of hard work. You should always get a property in an area where you can get a combination of rental income and capital growth as well as reliable tenants.
Here are some tips for building your empire
Research the market
Do you know the risks as well as the benefits? Is a buy-to-let really what you want? Would your money be better invested elsewhere? Investing in buy-to-let involves committing lots of money into your venture. When house prices rise, you can make big gains. Property investment has paid off for many people in terms of both income and gains, but you must go into it with your eyes wide open, recognising the potential advantages and disadvantages. If you know someone who has invested in buy-to-let or let a property before, ask them about their experiences. The more knowledge you have and the more research you do, the better the chance of your investment paying off.
Choose the right area
It’s all about location, location, location —which means a place where people would like to live. This can be for a variety of reasons. Where has a special appeal? If you are in the city, are there good transport links? Where are the good schools for young families? Where do students want to live? You need to match the kind of property you can afford to buy with locations that people would want to live in. Most people buying to let invest in property near where they live, as they probably know that area better than other areas, they also have a better chance of keeping an eye on the property.
Ensure your figures add up
Before you look around for properties, write down the cost of properties you are aiming at and the rent you are likely to get. Buy-to-let lenders should usually want rent to cover interest repayments on any loans. Don’t forget maintenance costs. What will happen if the property sits empty for a few months or even a year?
Target your ideal tenant
Instead of asking yourself whether you’d like to live in your buy-to-let property, put yourself in the shoes of your target tenant.
Who are they and what do they want? If they are students, the property needs to be easy to clean and comfortable, but not luxurious. If they are young professionals, it should be modern and affordable, not too expensive. If they are a family, they will have their own belongings and will need a blank canvas. Allowing tenants to make their mark on a property makes it feel more like home for them and they will want to stay longer.
Look for properties with potential
Most buy-to-let investors look for properties near where they live. But your town may not be the best investment. Cast your net wider and look at towns with good transport links, well populated or have a university. It is also worth looking at properties that need renovating, they can be negotiated on for a better sale price, then improved to match your target needs.
Research the market
Before you make any investment, investigate the negatives. House prices could be rising but growth has slowed and possibly could fall. If property prices slow down, will you be able to continue holding on to your investment?
Getting a mortgage is almost impossible now, but even if you do, the interest rates are impossibly high. Can you survive if property is empty for a while with no income coming in?
Visit the property periodicaly
It really pays to look after your tenants and then they will usually look after you. Most landlords abandon their properties for years after letting it out. They do not know what repairs are outstanding or the state of the property, as long as the tenant paid the rent and service charges. Keep up with the maintenance, make sure your property is a nice place to live and try to build up a good, personal relationship with the tenant if possible, although some tenants do not want to be bothered.
Landlords should visit the property every few months for an inspection, giving tenants a week or two’s notice. Most tenancies are for one year or more, then renewed or ended. This can help to build the relationship, and it enables you to keep an eye on any possible tenancy problems.
The biggest issue with many buy-to-let landlords’ investment returns is when they don’t have anyone in the property. Good tenants, who want to stay, help to avoid this and even if they move on, they may even recommend your property to someone else. It is better to have someone in your property rather than leave it empty.
Caroline A. Akinlotan
