Buy To Let
Buy to let, in a nut shell, is when you buy a property with the intention to rent it out to a tenant. With this method you can have a positive cash flow, if the mortgage is less than the rental, and get capital growth over the long term. This type of investment is a great example of using other people’s money to pay off a property.]The advantages of this type of investment are that you get rewarded from the start, with the monthly positive cash flow, and you get rewarded for your patience, the capital growth over time.
The disadvantages is that you have to go out and find those properties that could be buy to let properties, and they aren’t that easy to find. You also run the risk of not finding a tenant and then you will have to pay the mortgage out of your own pocket.
Here are some tips:
- Location, location, location. This is the most important thing to remember. The location of the property should be desirable for your tenants, close to public transport, local amenities, restaurants and bars. There has to be a parking facility nearby. If you are catering for the student market, proximity to the university would be an excellent selling point.
- Ask the local letting agents which properties are in demand and what rent you can expect in the area you are looking in. Remember not to overcharge; this will make it difficult to find a tenant.
- A well maintained and clean property will attract more tenants so always make sure your property is in good condition.
- You could furnish the property, if you do, do some research to find out what tenants like. Your letting agent could be a good source for this type of information.
- When you buy property it is important to remember that you will not be living there, so buy for your target market, not for your personal taste.
- Get a letting agent to manage the property for you, this will free up your time to look for more deals.
- Shop around for a mortgage; there are lenders out there that cater especially for buy to let properties.