5 Tips For Buying Your First Buy To Let Property
There’s lots of rumours in the property industry, that ‘buy to let is dead’
That’s NOT true.
Far from it in fact.
It’s unfortunate because, buy to let has become even more profitable now than ever before, because there’s LESS competition, and MORE great deals for you to grab hold of! The wealthiest property investors in the UK still buy to let property.
So how do you as a new property investor, get your first buy to let property?
Where do you start?
At Premier Property, we believe in sharing information with you that can be PRACTICALLY used, no fluff, no hype, just honest steps that work…
So let’s jump straight in.
Buy To Let Tip #1: Where to buy
WHERE you’re looking to buy a property is just as important as WHAT you buy.
This may seem like a pretty obvious factor to remember – but you’d be surprised how many property investors forget to do just this.
Look at your research.
Property investing is very lucrative when done right, but very expensive when done wrong. (I’m sure you’ve heard of a lot of the horror stories around property).
Knowing your area plays an important part in how successful you will be.
So, does your property include the best areas to rent out properties (which might not be in the area where you currently live in) …?
If the answer is ‘no’ then you need to go back to the drawing board.
ALWAYS think of the tenant when you’re on the hunt for a buy to let property.
Buy in an appealing area.
Somewhere which is going to be attractive to tenants and where there are enough people who will want to rent.
Think of your ideal tenant and put yourself into their shoes…what would they want each room to look like?
Here at Premier Property, we know that the location of a property is one of the most important factors when deciding what you invest in.
But remember that if you decide not to use a letting agent to manage your rental property, you will have to be available to your tenants if something goes wrong.
And so, because of this, it’s probably better to choose somewhere you can easily have access to.
Remember that this is not somewhere you are planning to live! It’s not about what you’d like but what your future tenants will want.
Want tips on doing your due diligence on a property? Watch this clip where I talk about getting your due diligence right every time.
Buy To Let Tip #2: Know your tenant
Now this is a topic people tend to get confused about.
Remember that this property is for THEM and not YOU.
In order to start getting a better picture of what you’re looking for in a tenant, start to map out some ideas so that you know what kind of tenants you’d want to live in your future property.
Mind maps, mood boards and photographs are just some of the tools you can use.
Think of yourself as a business…
Just like they must know their target market (who they’ll sell to), you need to identify your own prospective tenants so that you can ensure that your property is attractive enough for them.
This will encourage prospective tenants to rent from you.
So how are you going to do this?
Identify your “target” tenant and cater for them. If you show them that you know what they like, then they will be more likely to rent from you…
Buy To Let Tip #3: Know your investment yield
‘What is an investment yield? How do I get one? How will this help me?’
These are just some of the questions investors ask themselves.
An investment yield is the income YOU get back from an investment.
Buy to let property is generally a longer-term investment but any investment should “yield” a profit.
For example, if you go out and buy a property for £150,000 and your annual rental income is £7,500, then your yield would be 5%.
Of course, I cannot give any tax finance or legal advice, all I am doing is sharing my perspective with you as a property investor and developer and sharing what we do here at Premier Property.
You will also want to consider any costs.
This means advertising that the property is available for rent as much as possible.
It will really help your investment to do this.
Hundreds of people will see your advert everyday and will then contact you for more information.
Or, if you decide to use an estate agent to manage the property. This will also benefit you.
Also remember to factor in the original costs, like Stamp Duty.
If you are planning on being a landlord directly, without a property management company, then it is worth considering the value of your time as well.
Whether that’s finding tenants, dealing with paperwork or arranging for a replacement boiler.
Think about it like this – the more work you put into your property, the larger your annual renal income will be…
Like any investment, property prices and rental incomes can go up and down. Providing tenants with a good “service” will mean that they want to stay put which, in turn, means a more regular rental income because you don’t have to keep finding new tenants.
Go and check out this FREE eBook about how you can prepare for Brexit by clicking the image below! It is a great way to pick up top tips if you are just starting out in property investment…
Buy To Let Tip #4: Get the right mortgage
As a first time buyer, does it ever get overwhelming for you?
That’s okay – it’s what all of us at Premier Property are here for.
Let’s start off with mortgage.
Do know what kind of mortgage to get and where to get it from?
A mortgage for a buy to let property is different from one you would be granted when buying a property you are going to live in (a residential mortgage).
Now this is the important part…
Although mortgage rates on buy to let properties can sometimes be higher than residential mortgages, don’t be tempted to mislead or deceive the mortgage company about how you’re using the property because that would constitute fraud.
Shop around to make sure you get the best mortgage deal.
Here’s a video from Kam Dovedi and David Whittaker talking about what is happening in the mortgage market right now. Watch it now.
Buy To Let Tip #5: Make it legal
Last, but by no means least, never try to cut corners by not using a valid written tenancy agreement.
Particularly in England and Wales, if you don’t provide your tenant with certain notices and obtain a signed tenancy agreement before they move into the property, they may acquire rights that neither of you intended.
For example, you may find that it is nearly impossible to make sure your tenant leaves the property, even if they are not paying you the rent due.
Keep in mind that your tenant’s deposit should be stored in a Tenancy Deposit Scheme account.
This means that it is protected.
It is also helpful in judging if there are any disagreements with a tenant about how much of their deposit they receive back.
It’s also important to remember that your property has to meet legal requirements before it can be rented out…
This includes having an up to date EPC that meets Minimum Energy Efficiency Standards (MEES) and a House of Multiple Occupation (HMO) licence if applicable.
Seek professional help with your tenancy agreement and accompanying paperwork.
So whether you are just starting out in buy to let investing or are experienced in this area, follow these key tips and you should be able to achieve what you want to.
Of course these are just some of the steps you can take, but they will be extremely helpful when starting out.
Comment below with any questions or thoughts you have about buy to let and if you think it is a good investment!
And if you’d like more of the best tips on property investment right now, then have a look at this!
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Not only will this make you feel more confident and comfortable when starting out your brand new property venture, but it will also make you feel much more prepared, equipped and at ease.
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