Whether you’re looking to earn rental income or generate capital growth as the value of your property increases, it’s fair to say that buying an investment property can be an extremely profitable business.
That said, as with any other high value investment, it’s important to think about the potential implications and make sure you get things right. Here are a few things to consider when investing in a buy-to-let.
Before you even start viewing properties, it’s worth taking the time to think about how much you’re willing to spend and how much rent you will be able to get. After all, you want to make sure that you have enough money coming in to cover mortgage repayments.
On top of that, you also need to think about what will happen if your property is unoccupied and rent isn’t coming in. Make sure that you have enough money in your savings account to cover any costs whilst you don’t have tenants.
In times of economic uncertainty, it’s important to go into buying a property with your eyes wide open and research the buy to let market. Simply Google online listings of available properties to rent in your area. That way, you can get a good idea of how your money will perform. Not to mention, you will have a better chance of your investment paying off.
It may also be worth speaking with someone who has already invested property. You can then learn from their experience and fully prepare yourself for what will come.
Yes, you can rent out your property yourself and make more money that way. However, it’s fair to say that being a landlord can be pretty overwhelming – especially if you’re new to the property world.
You may want to consider hiring an agent to deal with all the nitty-gritty stuff. They can help you advertise your property and draw up the tenancy agreement, as well as deal with any required maintenance work. Sounds great, right?
While this will save you time and energy, bear in mind that you will have to pay the agent a management fee. So, consider whether hiring an agent will actually be beneficial for you.
You also need to factor in the risks that come with renting a property. No matter how popular the area is or how perfect you’re tenants are, things can sometimes go wrong. So, for your own peace of mind, it’s important to take out landlord insurance.
A good landlord insurance policy will protect your investment from insured eventualities, such as a flood or fire. That’s got to be worth a second thought! Remember, to compare landlord insurance in order to find the best deal for both your pocket and your property.
Being a landlord is a pretty big responsibility, so you need to think carefully about whether you’re cut out for such a role. While most tenancies tend to be a walk in the park, at some point, almost every landlord has to deal with difficult tenants or problematic neighbours.
Think about what you would do if your tenant had a dispute with their neighbour. 9 times out of 10, tenants will turn to you as the landlord to deal with any problems – whether it’s late rent payments, maintenance work or noise complaints. You need to make yourself readily available to resolve issues and also make sure that tenants feel comfortable enough to come to you with any problems before they get too out of hand.
What matters most is that you prepare yourself and take your responsibilities seriously.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.