When choosing a the right buy to let property, your main considerations are different to those you might apply when choosing a house in which to live. For example, you might not choose to live in an area heavily populated by students, but when looking for rental potential that same area may be exactly what you’re looking for. Choosing the right property with the right rental yields is important. This is true not just for your income but also because you want the rent to more than cover the cost of your buy-to-let mortgage. The Association of Residential Letting Agents produces a booklet giving you tips on what to look out for when choosing a buy to let property.
Below are things to consider when choosing the right buy to let property.
- Rental yield
- Research potential clients
- Research the area
- Internal specs
- Outside specs
- Legal obligations
This one may sound obvious, but the property needs to make sense financially – the cost of investing in the property should not exceed the rental income. Lenders tend to look at rental yields when approving buy to let mortgages, hence this needs to be worked out carefully when looking at the property.
This is all important as this determines how much money you would make off the property on an ongoing bases. A good indicator of rental income is checking what other similar properties are being let out for.
Think about who you are going to rent out your property to and make sure the property you invest in fits the profile of the tenant you have in mind – there is no point in investing in a family home if you are going to let it out to students.
Properties near to good transport links and amenities are likely to get the best rents and higher occupational rates. Letting agents can also advice you on which areas a popular. Do your research before you zero in on a property.
A new bathroom or kitchen will help in renting out the property but a very expensive fitted kitchen or bathroom is unlikely to return rental yields while costing more to buy.
Most tenants especially families will want a garden but at the same time prefer it to be low maintenence. Ensure that the outside space is manageable and can be maintained easily.
Ensure that the property can be sold without hassle in the future should you need to. It is always a good idea to have an exit strategy in place.
Be aware of your legal obligations as a landlord. Ensure your certificates are up to date and everything is serviced as it should be. It is also worth keeping Landlord Insurance in mind for those unforeseen circumstances and situations that could creep up from unoccupied periods to broken boilers.
The Financial Conduct Authority does not regulate Buy to Let mortgages