As a buy-to-let property investor, rental income is the lifeblood of your investment - here are seven ways you can increase your investments income:
1. Keep it fresh, clean and neutral
If a lettings agent has provided a disappointing rental valuation for your property you may be able to improve it by redecorating in neutral tones. Good old magnolia paint is available in great-value bulk buy tubs. Add interest and an ‘interior design’ look with wallpaper on one feature wall.
2. Let fully or part furnished
If there is a demand for fully furnished properties in your area you may be able to capitalise on this by adding furniture to your property.
Even if they are not going to be included in the tenancy agreement, stylish accessories and attractive bedding from Sainsbury’s can help create a desirable image for your property for photographs and viewings.
3. Invest in your kitchen and bathroom
According to the latest poll by estate agency group Spicerhaart, the kitchen and bathroom are the most important areas in the homes in which to invest.
If your budget won’t stretch to a new kitchen or bathroom, you could consider replacing the unit doors or updating old tiles for a relatively cheap transformation.
4. Create a low-maintenance garden
Few tenants are interested in spending a lot of time maintaining a garden so provide a pleasant outdoor area that requires little mowing or weeding, to maximise your property’s appeal. Reduce or replace your lawn area with paving slabs and gravel, while maintaining greenness with shrubs in borders.
5. Review your rent on a regular basis
Set yourself periodic reminders to check your rent against others in the area. If the average rate has been increasing, you will be able to increase yours accordingly.
6. Charge for late payments
Add a clause to your tenancy agreement to provide for a charge for late payment of rent to increase your income from late payers, rather than wasting time and money chasing them.
7. Fill void periods
Many landlords consider void periods a fact of life but effective management can help to keep the time your property is empty to a minimum. As soon as a tenant provides notice that they will be leaving, begin contacting past potential tenants who have made enquiries and don’t waste any time before advertising.
Showing posts with label buy to let investment. Show all posts
Showing posts with label buy to let investment. Show all posts
10 Tips for Buy to Let Investment
Buy to let property is still a popular long term investment. Property can often appear simpler to understand than stocks and shares. Here aree 10 tips to help you on your way to your first buy to let property.
1. Research the market
Ensuring you are familiar with the pitfalls as well as the benefits is essential. Speak to people you may know who are already experienced buy-to-letters, and read guides on the subject such as our beginners guide to property investment.
2. Choose a location
Choosing a property for buy to let is all about the location. Tenants, unlike buyers can move out at a months notice and will not hang around for a property that does not service their needs. Depending on your target market you will need to consider the proximity to local schools, transport links, night life and so on.
Research what competition you will face by using sites such as Prime Location or Right Move. You will be able to see what the going rent is for certain areas and, over time, see which properties take longer to rent out and which areas are popular.
3. Crunch some numbers
The excitement of looking around houses can take over all too quickly. Put pen to paper before you view properties and write down the cost of the house and the likely rental yield. Buy to let lenders often require a deposit of between 15% and 30% and the rental income to cover 125% of the mortgage repayments. Some lenders may accept less but at the expense of a low interest rate.
It is also important to have a contingency fund for when the property is not being rented and mortgage repayments must be met, as well as repairs which ought to be fixed quickly else your tenant will vote with their feet.
4. Shop around
Remember, this is an investment property – the head should always rule. Take your time to negotiate a good deal. By all means visit your high street bank for comparison but there are a wide range of finance options available for purchasing a buy to let property these days, including dedicated buy-to-let mortgage brokers to help you get the best deal.
5. Target your tenant
Novices are often quick to see themselves living in their properties. Remember you are not the tenant and put yourself in their shoes. A student will require functional accommodation, easy transport to their campus, perhaps a range of local shops as they may not yet run a car. Young professionals may require something more stylish, perhaps in a location with access to night life and good links to road and rail. A family will need space and to be local to schools.
6. Don't be over ambitious
Sure there are many who have made their millions from property, but experts suggest the days of double digit price rises are over. Focus on the long term and allow the rent to grow over time to help fund additional property investments.
7. Consider looking further afield
Most buy-to-let investors only consider properties near to where they live and it’s easy to see why – you’ll better know the areas and should anything go wrong you are local. That said your town may not be the best investment despite your inside knowledge. There may be other towns in need of rental property which you should seek out. Many buy to let property owners employ the services of an agent to handle tenants meaning that being local to the property is not so necessary.
Investigate towns and cities with good commuting links, or is a university town. Using a site such as OnOneMap can help quickly locate property near to these elements.
8. Negotiate
You are in a strong position as a buy-to-let investor being chain free. Vendors are often keen that what can be a lengthy transaction be as swift and smooth as possible. Discounts can be negotiated in order to generate a quick sale.
9. Know the pitfalls
Don’t ignore what could go wrong. How many months can you afford to pay the mortgage should the property sit empty for some months. Will you require your money out quickly? The property market has been strong for some time, if there were to be a drop in value could you ride it out? A simple rule of thumb is to factor in the property sitting empty for two months of the year to provide a buffer. If you are unable to cover the cost of an major repair not covered by insurance such as the heating system don’t invest yet.
10. Consider how hands-on you want to be
Buying a property is only the first step. You will need to find a tenant, deal with enquiries and collect payment. It is possible to do this yourself but if you’ve a full time job you may prefer to hand the property management to an agent. For a percentage fee they will find tenants, deal with problems and will have relationships with plumbers, electricians etc. should repairs be required. You can make more money by renting the property out yourself but be prepared to give up weekends and evenings on viewings, advertising and repairs
1. Research the market
Ensuring you are familiar with the pitfalls as well as the benefits is essential. Speak to people you may know who are already experienced buy-to-letters, and read guides on the subject such as our beginners guide to property investment.
2. Choose a location
Choosing a property for buy to let is all about the location. Tenants, unlike buyers can move out at a months notice and will not hang around for a property that does not service their needs. Depending on your target market you will need to consider the proximity to local schools, transport links, night life and so on.
Research what competition you will face by using sites such as Prime Location or Right Move. You will be able to see what the going rent is for certain areas and, over time, see which properties take longer to rent out and which areas are popular.
3. Crunch some numbers
The excitement of looking around houses can take over all too quickly. Put pen to paper before you view properties and write down the cost of the house and the likely rental yield. Buy to let lenders often require a deposit of between 15% and 30% and the rental income to cover 125% of the mortgage repayments. Some lenders may accept less but at the expense of a low interest rate.
It is also important to have a contingency fund for when the property is not being rented and mortgage repayments must be met, as well as repairs which ought to be fixed quickly else your tenant will vote with their feet.
4. Shop around
Remember, this is an investment property – the head should always rule. Take your time to negotiate a good deal. By all means visit your high street bank for comparison but there are a wide range of finance options available for purchasing a buy to let property these days, including dedicated buy-to-let mortgage brokers to help you get the best deal.
5. Target your tenant
Novices are often quick to see themselves living in their properties. Remember you are not the tenant and put yourself in their shoes. A student will require functional accommodation, easy transport to their campus, perhaps a range of local shops as they may not yet run a car. Young professionals may require something more stylish, perhaps in a location with access to night life and good links to road and rail. A family will need space and to be local to schools.
6. Don't be over ambitious
Sure there are many who have made their millions from property, but experts suggest the days of double digit price rises are over. Focus on the long term and allow the rent to grow over time to help fund additional property investments.
7. Consider looking further afield
Most buy-to-let investors only consider properties near to where they live and it’s easy to see why – you’ll better know the areas and should anything go wrong you are local. That said your town may not be the best investment despite your inside knowledge. There may be other towns in need of rental property which you should seek out. Many buy to let property owners employ the services of an agent to handle tenants meaning that being local to the property is not so necessary.
Investigate towns and cities with good commuting links, or is a university town. Using a site such as OnOneMap can help quickly locate property near to these elements.
8. Negotiate
You are in a strong position as a buy-to-let investor being chain free. Vendors are often keen that what can be a lengthy transaction be as swift and smooth as possible. Discounts can be negotiated in order to generate a quick sale.
9. Know the pitfalls
Don’t ignore what could go wrong. How many months can you afford to pay the mortgage should the property sit empty for some months. Will you require your money out quickly? The property market has been strong for some time, if there were to be a drop in value could you ride it out? A simple rule of thumb is to factor in the property sitting empty for two months of the year to provide a buffer. If you are unable to cover the cost of an major repair not covered by insurance such as the heating system don’t invest yet.
10. Consider how hands-on you want to be
Buying a property is only the first step. You will need to find a tenant, deal with enquiries and collect payment. It is possible to do this yourself but if you’ve a full time job you may prefer to hand the property management to an agent. For a percentage fee they will find tenants, deal with problems and will have relationships with plumbers, electricians etc. should repairs be required. You can make more money by renting the property out yourself but be prepared to give up weekends and evenings on viewings, advertising and repairs
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