You can never have too much advice about how to improve your chances of succeeding in property investment. Here’s another 5 expert tips to consider when entering a buy to let investment.
1. Bring out the calculator
Buying houses as a buy-to-let investment isn’t like a shopping spree. You can’t just pick and buy the houses that you like without first computing how much everything will cost. You can’t charge everything on your credit, after all.
So grab your pen and paper, list down the purchase price of the houses you’re hoping to buy, and then write the monthly rent you’re expecting to get out of them.
Usually, buy-to-let investors take out mortgages in order to buy a house, and they use the monthly rentals to pay off their debt. That’s why it’s also important to think about back plans too! What are you going to do when the property sits empty for a couple of months? What will happen when interest rates start to increase? Where are you going to get the money to pay the lender then?
Aside from that, never forget to include in your computation the additional costs you will have to pay during the entire course of your investment. It’s not just about the purchase price. Take into consideration maintenance costs, agent’s fees (if you won’t be dealing with the tenants directly), taxes, and other miscellaneous costs.
Once mortgage, costs and tax are taken into account, you will want the rent to build up over time and then potentially be able to use it as a deposit for further investments, or to pay off the mortgage at the end of its term.
2. Don’t be too self-centred
A very big mistake that a lot of property investors commit is always putting their needs and wants first before their potential tenants. Never forget to consider who your target clients are, what they are looking for in a rental property, and how much are they willing to pay for a good place to live in.
If you want to cater to families, then a large space is top priority on their list. For students, it doesn’t have to be over the top luxurious but must have the basic amenities for daily living. While young professionals would appreciate a more modern and stylish living space.
3. Ask for a discount
Never, ever be too shy to ask for a discount! Remember that haggling over the price isn’t a sin, it’s a right! I’m just kidding that second one, but, still, never forget to ask for a discount.
Buy to let investors and first time buyers have the same advantage, when asking for a discount, because you’re buying to hold and not to sell immediately. This can be a major asset when negotiating a discount, especially in a tough market such as the one we have now. Make low offers and do not get talked into overpaying.
4. Are you going to be a hands-on owner?
Being a hands-on owner simply means that you’re going to deal with your tenants personally, on your own, without any help from an agent. While this means more money to keep in your pocket, it will cost you a lot of time, weekends, and peace of mind.
For a fee, agents will take care of advertising vacancies, and all the problems regarding your property from broken plumbing, faulty wirings, and other things that may go wrong. Many independent agents offer an excellent and personal service. Select a shortlist of agents big and small and ask them what they can offer you.
5. Do your homework
Knowing all that you can about buy to let is important for every novice buy to let investor. Find out the pros, cons, and everything in between about this property investment strategy. Be completely sure that this is the strategy that you want to do, because once you’ve invested your money into a property it’s going to be hard to pull it out.
You can start your research by asking friends or family who have had experience with buy to let, search the internet for blogs and articles online about the basic dos and don’ts of buy to let, and, if all else fails, reach out to buy to seasoned investors and get first-hand tips from the experts.