Though the rental market in the UK has always been strong, recent improvements in the property market, low interest rates and increases in rental prices have made becoming a landlord an incredibly tempting option.
High rental yields and affordable properties are drawing investors back to the buy-
to-let market in droves. However, it’s not a guaranteed income and there are several pitfalls that need to be avoided at all costs.
So if you’re thinking of becoming a landlord, there are five essential tips that you need to take into account before you take your first steps on the property ladder.
1. Research the market
The first and most important tip is to research the market in the areas that you want to buy.
Find out what the average rent is, the sort of standard rental properties are finished to, and what sort of tenants you can hope to attract.
By learning all you can about the potential rental market that your property would
be competing in, you can ensure that you make a good investment and aren’t left
with a property that no one wants to live in.
2. Get the right mortgage
If you’re buying a house or flat specifically to rent out, you’ll need to get a buy-to-let mortgage.
These can be considerably more expensive than a normal residential mortgage, with some lenders insisting that the potential rent covers 125% of the mortgage repayments.
Some lenders may also insist that you go through an established agent rather than handling the rental yourself, something that can add significantly to your costs.
If you’re letting out a property you already own, you’ll need to get permission from your mortgage provider in order to rent it out. Most lenders will ask for a one-off payment in order to change your mortgage type.
3. Do the maths
Once you’ve found a property and researched the area, calculate your mortgage repayments and potential income to make sure that the sums add up.
A rental yield of at least 5% is ideal, though some parts of the country offer yields of up to 8%. To find the best deals, check out fruitfulproperty.com where off-market properties can be bought at significant discounts, therefore increasing your potential rental yield.
4. Be picky about your tenants
If you’re hoping to sell your property on one day, you need tenants that are going to take care of it and protect your investment.
Though it can be tempting to take the first tenants who come along, try to hold back and research their rental history before you agree to a contract.
Not only do good tenants look after a property better, but they are also more likely to contact you if there’s a problem with the property, potentially saving you a lot of money in the long run.
5. Get landlord’s insurance
One of the most essential purchases that you’ll make as a landlord is landlord’s insurance.
Protecting your property and its contents in the case of an accident, investing in comprehensive insurance could save you serious money in the long term.
Landlord’s insurance not only protects your investment, but also covers alternative accommodation for your tenants in case your property needs to be vacated, as well as landlords liability and employers liability – giving you peace of mind and providing great cover in case of an emergency.
Becoming a landlord requires a lot of paperwork, research and hard graft, but once you’ve got good tenants in place and the rent is coming in, you can sit back, relax and watch your investment grow.
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