1. Do Your Research
Entering the Buy-To-Let market, especially at the moment, is a big commitment. Before you take the plunge, make sure your money wouldn’t perform better elsewhere. If you are ready, however, then make sure to do your research before investing.
Investing in property has been remarkably profitable for some, but it is important to enter into this environment with your eyes wide open, so to speak. There are many pitfalls so research and speaking with others in the industry for tips and advice is invaluable.
2. Location, Location, Location
One of the most important choices you will make is where to buy. You’ll want to match the type of property and area to those who you would ideally like as tenants. Again doing your research comes into play here.
Another point to make is that you may be tempted to straight away invest in a more affluent area. As tempting as that may be, one thing to remember is your potential yield on your investment. A more affluent area will have higher property prices, meaning a much higher rent required in order to profit, which in turn will reduce demand significantly. Consider as an alternative, purchasing a property in an up & coming area with local investment and high demand. You may be looking at a potential 5% yield as opposed to 2.5% – 3% in a more affluent area.
3. Have your figures in place.
One of the most important things to do before you invest in anything is to do your numbers! You have to be sure of any mortgage repayments, service costs, maintenance, etc. What happens if a suitable tenant cannot be found for say 2-3 months. How will this affect your margin?
Be sure of all costs before entering into any agreements.
4. Find the best offer
It goes without saying that one should shop around when finding the best rates/deals on any loans or mortgages. A good broker is indispensable here. Be sure to find a good one as they can talk you through the whole process and find you the best available deal for any repayments.
Don’t leave it all up to them, however. It still pays to know your stuff when entering into any discussions regarding what type of mortgage suits you best.
5. Your Tenant
When considering a property, consider your ideal tenant. What would they want?
If you ideally would have a family rent in the long term, then things like a big garden, close to schools, more than one bathroom, etc are important. Also allowing them to make some changes like decorating or furniture could be important and make them more inclined to stay longer.
If you would rather rent to young professionals then things like modern utilities, modern decor, close to public transport and high-speed internet are all things to consider.
Student accommodation on the other hand needs to be clean and comfortable but not luxurious, close to public transport and again high-speed internet is a must.
6. Avoid Costly Renovations
For seasoned professionals, taking a run-down property and breathing new life into it, and making a handsome profit in the process is certainly the way to go. However, as a first time buy to let landlord, it is advisable to keep things simple as you learn the ropes.
This isn’t to say you would not be perfectly capable of pulling it off, however like most things in life it takes time to perfect anything. Renovating a property and maximising profits requires a quality trustworthy contractor and as much knowledge of the industry as possible in order to efficiently allocate your budget.
7. Your Advantage
As a first-time BTL investor, you have a distinct advantage in that you are at the beginning of your journey and represent less of a risk of a sale falling through due to the fact that you are not reliant on a sale to go through in order to fund your next move.
Use this advantage in order to get yourself the best deal. Take into account factors like a Landlord who has rented for many years exiting the market and cashing in. He may be more willing to accept a safe lower offer than say a young family making their first move and are naturally looking to maximise their ROI.
8. Hire a Property Management Company
Being a landlord doesn’t stop at handing over the keys and checking the bank once a month for rent. Think 3 am calls in the height of winter because a boiler has finally given in, or water not working just as you’ve settled in to watch the evening’s football. All of these matters are your responsibility and the more properties you own, the more issues will arise.
The solution is to hire a property management company like KPM.ie . A good property management company will take the hassle out of being a landlord and handle all issues with professionalism and quality workmanship. Contact KPM today and let us assist you with your portfolio.