4 Steps to buying a rental property
Buying and managing rental properties should be seen as a business. Even if you don’t intend to have a large portfolio of rental properties, you should be prepared.
Planning out what you need to do, when you need to do it, and how you can accomplish it, is an important part of being a successful landlord.
You should also get the advice of industry experts, such as estate or lettings agents, accountants, or mortgage brokers.
Here are four essential tips to think about when it comes to buying a rental property:
1. Make sure you are in a position to buy
When buying a rental property, there are several factors to consider, an important one being having the funds to buy one in the first place! This could mean that you already have the means to buy a property, or that you’re seeking a buy-to-let mortgage.
Either way, being able to show an estate agent that you are in a position to purchase is essential. Speak with potential lenders and outline what it is you are hoping to achieve and how much you need to borrow. There are forms to fill in about your income and your outgoings before the lender can tell you whether or not they are likely to give you a mortgage offer.
Top Tip: You will need to have information to hand about your financial affairs, so make sure you know all the details.
2. Speak to the right people to get the right advice
Buying a property entails a lot of legal work. Unless you are trained in such matters, you will need a solicitor who knows the buy-to-let property way of doing things. If you’re buying as a limited company, this is another difference too, so someone experienced in such matters should be engaged.
An accountant who understands your financial position can work out the correct taxes that need to be sorted when the time comes. Buying to let may be a sound financial investment but get the tax side of things wrong and you could be in for an unwanted hefty bill at some point.
Top Tip Do your research and ask people for recommendations.
3. Now, what about the property?
After you’ve spoken with your mortgage and financial advisers, it’s time to start thinking about the property itself.
- What sort of property do you want?
- What sort of tenant do you want?
- Do you want students, an older couple, a family, or professionals?
- Will you allow pets?
All these factors must be taken into consideration because they affect where the property is and what type of property it is.
You may also be set on a certain location, but a good lettings agent will discuss the right areas with you and advise you on your investment.
Top Tip Know your goals and what sort of a landlord you will be. Remember, it’s a business, so it must make business sense.
4. Consider Management Services
Managing a rental alone isn’t for everyone. Plus, if you have more than one property to let, being a landlord can quickly become a full-time job, and very time consuming.
If you don’t really have the time or the skills to do the work, then you should consider a managed letting service. By this, we mean an agent will find you a tenant, do the checks, and make sure the deposit is secured where it should be, and then manage the property for a fee. If you employ a lettings agent to manage your property, this could save you a lot of time and take the headache away from you.
Top Tip Think about how you want to run your property and make a choice that suits you.
