How to choose an investment property
But not all properties are equally good investments. And if you pick a dud, you could be left covering the mortgage out of your own pocket and even having to sell at a loss. Here's how to get it right.
Doing your research before you invest in a buy-to-let property is vital.
Check out local lettings agent websites to find out how much properties in different parts of your city or town are renting for, and concentrate your search on areas that have good transport links and services.
These can often make the difference between finding a tenant and having to cover the costs yourself while your property stands empty.
Location is not the only thing to consider before buying, though. You also need to think about what sort of tenant or tenants you want to attract.
If, for example, you live near a university, a student house with a few bedrooms may prove the best choice. If, however, you would prefer to attract a young professional couple, for example, then a one or two-bedroom flat is more likely to fit the bill.
Invest within your means
When you own a buy-to-let property, it is very likely that you will have some periods where no rent is coming in. Should the roof start leaking or the boiler break down, you will also need to find the cash to pay for the repairs.
When budgeting, you therefore need to consider these costs, as well as the purchase price of the property and additional costs such as legal fees and stamp duty. By factoring in all the potential costs, you can avoid overstitching yourself and landing in financial hot water as a result.
Don't pay too much
Being a buy-to-let investor means you are not in any property chain, giving you greater negotiating strength than someone waiting for the sale of their own property to go through before they can truly commit.
The danger with this approach is that you might lose the property you have your eye on to another buyer, but it is better to take your time and move on to another house or flat than to overpay and regret the price you paid at a later date.