29 May Buy To Let – Our Top Tips Part Two
Last month we brought you Part One of our buy-to-let tips and we explained how important it was to do the proper amount of research in order to make informed decisions about your investment, as well as all the other things to consider before diving in to the world of land lording.
We have a busy and thriving lettings department who are always on hand to talk through your property options. So, if you’re thinking of investing in buy-to-let make sure you read our tips and contact us via email or call us on 01892 530109.
Make sure you look into the costs and coverage of various insurance policies. There are products out there which can protect you, should your tenant be unable to pay their rent – the term you should look for is ‘rent guarantee insurance’. These policies can stand alone from specialist insurers or add-on policies to wider landlord insurance; they can be relatively inexpensive but if you are tight on your budget they are extremely important and can cost as little as £50.
Find a Fixer Upper Further Afield
Many buy-to-let investors search for properties local to where they live but it’s not always the best investment. Sure a property close by is easy to check in on, but if you are employing a property management service why would you need to? Search for properties in well-connected towns within a wider radius.
It is also looking at properties that might need modernising. You can negotiate harder on tired or run down properties and you could get better value for money. Remember to ensure that the price is low enough to cover refurbishment and allow for the inevitable over-run on costs.
As a buy-to-let investor you have the same advantage as a first-time buyer when it comes to negotiating a discount. If you do not have a property to sell in order to fund your investment and have no chain associated with your property there are fewer risks attached to you as a buyer. This gives you the opportunity to negotiate with the vendor to get the best price for the property. Make sure you know the market in order to avoid over-paying.
The Pitfalls of Buy-to-Let
It’s as important to know the risks you take with buy-to-let as it is the benefits. Most of the things you need to consider are affordability issues and remember you’ll be responsible for the property’s general maintenance should it need it. You’ll also need to consider the new tax implications of buy-to-let, you can read about tax on buy-to-let here.
The sales market can be volatile and you need to ensure that you are prepared for fluctuations in house prices. Also mortgage rates are at the moment, but what happens when your fixed rate is over and you are faced with higher interest rates – do the rental payments more than cover the mortgage payments to cater for this?
Even the most popular rental areas in the country can have dips in activity and demand. Can you afford for your property to be empty for a period of time? We recommend that you have enough financial buffer to pay the mortgage should the property sit empty for two months of the year – this is more than enough and will take the pressure off.
If you decide not to be a ‘hands on’ landlord, make sure you choose a trustworthy property manager to look after your property. Look for the Arla Property Mark logo on their website and interview them as you would any person charged with looking after a valuable asset.
If you are looking to buy-to-let in Tunbridge Wells or the surrounding area, make sure you speak to our Lettings Team who will explain exactly what you should expect from our property management service.
Get in Touch
If you would like to speak to a member of our team about your property options please make sure you call us on 01892 530109 or email us. Remember, for property in Tunbridge Wells and the surrounding areas, follow us on Facebook, Twitter and LinkedIn.