Thursday 29 September 2011

Ten tips for buy-to-let


1 Look further afield
It may be that you can find more affordable houses, or keener demand for rented property, in a different part of the country from where you live.

2 Do your sums
Work out the monthly rent you can expect against the cost of your monthly mortgage repayments. Factor in the size of the deposit required (some mortgage firms now want 25 per cent), plus what happens if the property sits empty for a month or two.

3 Research the market as a whole
Consider the effects of the Government’s decision to cap the amount of rent it allows housing-benefit recipients. The same applies to the Article Four restrictions (on the type of tenants you can take) that some councils are planning to impose on landlords.

4 Students may no longer = money
Traditionally, they turn up in large numbers in university towns with their parents guaranteeing rent. But the tripling of college fees may change all that. Some students may even choose to go to college in their home town and live at home with Mum and Dad.

5 Haggle over price
It’s not as if you desperately need the property to live in, so you can afford to be tough and use your no-chain status to get a good price for the place you’re buying. Money saved at this point will all be profit.

6 Let your voice do the talking
Don’t just rely on your fingers plus computer websites. Ring around all the local estate agents to find out what kind of properties are in demand and from whom.

7 Consider a letting agent
Are you going to be on hand 24 hours a day to deal with tenants complaining about malfunctioning boilers and leaking taps? Do you know about gas-safety certificates, energy performance certificates and which fund to pay the tenants’ deposit into? If not, you might want to employ a letting agent (they will charge 10-12 per cent of the rent).

8 Find out about your tenants first
You want to see their recent bank statements and utility bills and get a reference from their employer and previous landlord. For assistance, ring the Landlord Action helpline (0800 856 7878).

9 Think about selling
If the bottom falls out of the rental market, or the nearby university stops sending students, will you be able to sell your property? Not if you’ve deliberately bought a cheap place in a rundown area.

10 Have a plan B
What if your tenant loses his job? You need to have the answers to this question before you go down buy-to-let Boulevard.

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