07 Jul Things to Consider Before Buying a Buy-to-Let Property
Becoming a landlord by purchasing a buy-to-let property and renting it out to tenants sounds to many like a route to easy money.
While we’d never say being a landlord is easy as, like all businesses, it doesn’t come without its problems and pitfalls, but being a landlord certainly can be lucrative if you don’t jump into it without carefully thinking everything through before the completion date.
So, before you start scouring estate agents’ windows and property websites, here are a few things to bear in mind before starting your buy-to-let journey.
Who’s your target market?
Your first consideration has to be who are you planning to rent the property out to.
For instance, most families will be looking for a multiple-bedroomed house with either a driveway or on-street parking. They’ll also need to be near their child’s school.
On the other hand, single professionals who commute each day will have other priorities, such as being near a train station, while students will want to be near their university, the cut-price supermarket and the cheapest pub.
For those of you thinking of renting out a holiday home such as a static caravan or lodge, like these ones from Sunrise Holiday Homes, then close proximity to the beach and seaside amenities will be a must. And, yes, by ‘seaside amenities’, we mean ice cream.
If you’re considering buying a leasehold property such as a flat or an apartment, your solicitor will need to check the lease for any restrictions on renting it out.
Your estate agent will be able to answer some of your questions such as the cost of the service charge or ground rent but you’ll have to ask your solicitor about any restrictions you particularly want them to look out for.
For example, if you were planning on buying a flat to rent out as a pet-friendly AirBnB, your lease may prohibit a) using the property as a business; and b) animals, which will totally scupper your plans.
Always go thoroughly through the lease yourself too, as your solicitor may have missed something that’s a dealbreaker for you.
Being a landlord isn’t just about sitting back and counting your money. There are all kinds of expenses you will accrue in your empire-building quest for world domination.
Apart from the obvious things like solicitor fees (which will be more if it’s a leasehold property), there are also other expenses you may need to bear in mind such as service charge and/or ground rent, maintenance fees, renovations, repairs, cleaning, landlord insurance, letting agent fees and any loss of income if the property is empty for a while in between tenants.
You’ll also need to take into account the resale value if you decide to sell up in the future.
Don’t let your heart rule your head
Estate agents don’t always stick to sending you suitable properties when you’re on their mailing list.
You might have specified one-bedroom apartments near a train station but this won’t stop estate agents from sending you details of huge converted barns in the middle of nowhere.
If this happens, there’s a good chance you’ll fall in love with the huge converted barn in the middle of nowhere and imagine yourself living in it when it’s not being rented out to pop stars as their country retreat.
But, let’s face it, what will actually happen is you’ll be stuck with a massive house – with its accompanying massive mortgage – in the middle of nowhere that no one wants to rent and that probably needs a ton of maintenance done to it because of its rural location.
So, keep your business head on, stick to what you planned and don’t let yourself be sidetracked by your personal dream property.
There’s no doubt about it. Buying an investment property and becoming a landlord can be a lucrative and worthwhile pursuit. It’s still a big commitment though, so take the above into consideration to make sure you’re buying the right property.