Thinking about entering the buy-to-let market? It’s a competitive field, but there are plenty of reasons why it is so popular at the moment. Borrowing money is cheap right now, and many more people are starting to rent rather than buying a home. Plus, there are plenty of government incentives to help you along the way. But, once you have made your decision, how do you make the most return on your investment? These tips should help, so read on to find out more.
Understand your market
Never go into the buy-to-let market without understanding your ideal customers. You can make money from your investment in almost any situation, but you won’t if you read the landscape wrong. For example, you won’t entice families to a run-down area with few amenities – students might be a better market to look at. Similarly, young professionals are unlikely to want to live miles out of town in the middle of nowhere, preferring city life instead. They also have the disposable income available that mean they can afford new apartments in the heart of a very popular area.
It’s all about location
The location is everything if you want to maximise your potential returns. The trick is to research the local market and get as high a rental return as you possibly can. It’s vital to find up-and-coming areas that aren’t too popular yet. You can buy at a lower price and raise your rents as it becomes more attractive to tenants. Keep an eye out on the local government plans for restoration – it can sometimes bring incredible returns. However, it is a risk – you never know how long these changes can take. Seek out advice from anyone you know with experience of rental property – it can help make the difference.
Do the sums
The way to make money from buy-to-let property is by understanding the maths. For example, you could buy a rundown house or apartment and do it up. However, if it’s going to cost you an arm and a leg, you have to ask yourself if it’s worth the investment. All areas have ceilings when it comes to rental value, and just because a place looks fantastic doesn’t mean you can charge your tenants a fortune. You might be able to squeeze a little more than the average rental value, but it won’t be much.
Create the perfect team
You can go it alone when renting out a property, of course. But, it’s a lot of work, and in many cases, it is best to build up a team to help you. A lawyer is essential so that you know the local laws and your responsibilities as a landlord. It will also ensure your tenancy agreements are watertight. You might want to think about a property management company, too. They will handle all the landlord responsibilities for you, for a fee, leaving you free to return to your busy life. You will also need to know about the local tradespeople in your area, and develop relationships with them. You will be responsible for all repair work, so expect to use their services often.