How to choose a Buy-To-Let property

 Choosing a Buy-To-Let property is an attractive investment for many people, which takes much consideration and planning. We have complied a list of recommended tips in what to look for in a property.

1/ Budget

It’s not going to be a good investment if your costs are more than your rental yield. Work out your budget carefully. Skipton International has a handy online calculator to let you know how much you can borrow against the expected rent. Make sure you also factor in insurance, agency fees, the costs of buying, etc and have a financial safeguard so should your property be empty for a couple of months you have some flexibility.

2/ Rental yield

This is all important so make sure you do your research. There are some online resources that can give you an idea of what the market is doing, the Homelet Rental Index is published monthly and can give you an overview. You can also look at what similar properties are renting at in the areas you’re looking in. Look at the quality and style, and which ones have quickly left the market. 

3/ Research potential tenants

Buying a property in a busy street may not be your ideal location, but it could be more affordable and provide a ready stream of eager renters keen to live somewhere affordable and with easy access. Who is it you would like to rent to? Students, young professionals, families? Then think about what kind of property it is they might like. You also need to check with your mortgage company as there might be restrictive criteria on occupants and property type.

4/ Research the area.

It’s fairly obvious that properties located close to good transport links and amenities are likely to get the best rents and always be occupied. You can also take advice from a local letting agent who should be able to tell you what areas are popular and might get the best rents. Look in the local papers, at the kinds of properties and what the average rental rates are. There are also plenty of lettings websites for online research if you’re not in the area.

5/ Internal spec.

Having a new bathroom suite and kitchen is going to help you rent your property, but having a new modern designer bathroom suite and kitchen which have cost an excessive amount is unlikely to benefit you. Prospective tenants prefer a home which is easy to maintain. Remember this is an investment, put in easy maintainable fixtures and fittings that are clean and functional.

6/ Outside space

Many tenants will like having an outside space, but generally speaking unless you are a gardener, most people want a small, easily maintainable garden. Again it will depend on your tenants. Young families will obviously appreciate a good garden size, but for students and young professionals having somewhere for a bit of alfresco eating and to sit out in, that doesn’t require weeding and grass cutting every weekend, is likely to be more attractive.

7/ Maintainability 

Maintenance can be expensive. Look for a property that’s easy to maintain and look nice. Newer buildings are likely to have less costs, but might be more expensive to purchase. 

8/ Check condition

This is just as important, if not more so, than when you buy your own home. If you rent a sub standard property where for example, the electrics are not safe, then you could be liable. You should also make any repairs straight after buying rather than find half way through a rental contract that the problem has become so acute you need to do the building work immediately. Tenants don’t appreciate being inconvenienced and it is likely to lose you rent if not the tenants.

9/ Marketability

You might be buying this as a Buy-To-Let, but there could come a point when you want to sell your investment. Will you be able to sell it if you need to?  Hopefully you won’t need it, but have an exit strategy just in case.

10/ Obligations and legals

Be aware of your obligations. Ensuring gas boilers are serviced to prevent carbon monoxide poisoning, that smoke alarms are fitted etc. This is where having a good letting agent will help as they can advise. Make sure you also have a good tenancy agreement properly drawn up and don’t forget to check out your tax situation.

Remember, owning a Buy-To-Let is a medium term investment, but it does need to be something that benefits you financially and isn’t stressful so choose wisely and enjoy.