How To Make Your Buy-To-Let A Success.
Buying a property with a view to renting it out can be very profitable when done right but also extremely costly and stressful if you don’t know what you are doing. Let’s take a look at some tips to help you avoid some common buy-to-let pitfalls and become a successful landlord.
Once you become a landlord you will have to learn to be strict and professional with your tenants. This can be difficult to adapt to and it can be tempting to let your heart rule your head and take pity on tenants who are struggling to pay their rent. You must keep in mind however that buying to let is a business and it should be run as such, therefore you should always keep a level of emotional detachment.
Renovate To Add Value
Once you buy the property it’s always a good idea to do some renovation to increase the overall value of the building and make it more appealing to potential tenants. Renovating a property isn’t just a good idea if you are planning on selling it, if you can add to the value of the property then you will be able to charge extra rent, which will increase your profit in the long run. This will also reduce the likelihood of you having to pay to replace fixtures or make repairs around the property.
With this tactic you can search for properties needing work that are being auctioned off for cheap and then do them up but bare in mind that you will need to stick tightly to your budget to ensure that the purchase price and cost of refurbishment will leave enough profit for you in terms of what you can charge for rent. Ideally you will want the final value of a refurbished property to be at least the purchase price, plus cost of work with an extra 20% added on.
When you are a landlord you can be certain that you are going to come across some less than ideal tenants. That’s why in recent years it has become pretty much vital for you to have landlord insurance in order to protect yourself from damage to your property and rent-dodging tenants. You can for example take out Rent Guarantee Insurance, which will cover you if a tenant fails to pay their rent. Being covered in these circumstances will make your life a lot easier and save you a lot of time and money trying to enforce payments or repair damage.
Know Your Customers
Think about the type of tenant you want to attract to your property and that will help you create a home that will appeal to them. Many buy-to-let investors target students as they provide a steady and regular source of income although they do bring their own difficulties and problems such as disturbing neighbours and damaging the property. With this group- however you can invest less in the décor and furniture of the property and focus instead in making it easy to keep clean. If you are targeting young professionals or families then you can adjust the décor and style of the property accordingly.
Consider The Area
It’s natural to start your search for a buy-to-let property close to home but this may not always be the best option for you. You may think that you need to buy a property close by to be able to manage it affectively but if you use an agent to manage it for you (which I recommend) then this isn’t necessary. Take a look further afield and do some research on areas that have lower house prices, are up and coming and areas with high student populations are always great for rental opportunities.