A volatile stock market and low interest rates make the appeal of buy-to-let properties as investment opportunities quite high at present.
While it may not be as lucrative an investment as during the boom years, buy-to-let properties can be a great choice for shrewd individuals.
If you are in a position to raise a deposit of around 25%, then buy-to-let could be the investment you’ve been looking for.
However, as with any investment, it is important to do things right and remember that low interest rates will inevitably rise and that is something that you have to be prepared for.
As with any investment, it offers no guaranteed returns, but if you are one of those people who have confidence in bricks and mortar then follow these important guidelines:
Do Your Research
First and foremost, do your research; especially if you are unfamiliar with the housing market and buy-to-let investments. You may even discover that it is not an investment that you want to make and seek alternative vehicles to get the most out of your money.
For example, it wasn’t that long ago that a competitive savings account provided the best return on investment. Don’t forget that buy-to-let will ultimately see your money tied up in a property that could even lose value.
Select the Right Area
This is crucial for a buy-to-let investor as choosing an area that does not appeal to prospective tenants could destroy your entire investment plan. The ‘right’ area does not imply cheapest or most lavish, but instead, a place that virtually rents itself.
Think transport links for commuters; vicinity of local schools for families; and maybe even campus proximity for students. It may sound simple but your investment hinges on your buy-to-let property actually being occupied the majority of the time.
Work out the Figures
You need to be confident that the sums add up when it comes to buy-to-let investments. Carefully calculate everything before you start looking around houses.
Mortgage lenders often want rental payments to cover 125% of repayments and you’ll almost certainly need a 25% deposit to secure a buy-to-let mortgage. Also, don’t be naïve and think that your property will be rented all the time. What will you do if it’s vacant for a few months?
Consider Your Tenant
This aspect relates more to the décor of the property in which you are offering and the terms you outline in any rental agreements. For example, students will relish somewhere easy to clean; young professionals will probably be looking for a modern style; and young families may want a completely blank canvas, so they can make it their own.
Consider this last point in the rental agreement as allowing tenants to make a property really feel like home will inevitably see them stay for a longer period of time; something that buy-to-let investors want.
Letting your property through a reputable firm like Rentify.com will also ensure tenant satisfaction and save you costs.
Get the Best Deal
Finally, it is crucial that you get the very best deal possible. Don’t just head straight for your bank once you are ready to get a mortgage. Instead, shop around and use online comparison sites to check out every deal possible.
Likewise, you are not in a chain, so use this to your advantage when negotiating on property prices. Make low offers to start with; you can always increase them at the end of the day.
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