In the recent years, UK market has seen significant growth in the buy-to-let sector. Many people buy properties as an investment and rent it out in order to make a profit or to secure some capital for the future.
Let’s assume that you have just bought a property. Perhaps you expect that the value of your house will increase within the next years or decades. However, you cannot be sure that it will bring you any profit, in fact, the value of the property may stay the same as when you bought or even decrease. Therefore, you might want to consider renting it out to tenants and pay this way your monthly mortgage.
If this is your first time and you do not know where to start, have a look at the information listed below. Here’s a quick guide of things you should consider:
Do your research
There are many factors you must consider regarding the location. You should conduct conscious and in-depth research of the neighbourhood, make sure it is worth investing. Keep in mind the prospect tenants – think whether you want to rent to a family or students and reassure about the local amenities, transport links, schools, grocery stores, parking spaces etc. It will all add to the value of your property. Think realistically in terms of what you can really afford. Consider the upcoming costs – preparation, perhaps furnishing and the costs of maintenance.
Calculate all the potential costs and returns. Research your mortgages options and consider the financial risk from void periods or any changes on the market. The return on buy-to-let investment can be estimated by looking at the costs of buying the property and the rent that your tenants will pay. However, think in the long term and remember that prices in the housing market can change easily, affecting the overall return.
Find the right tenants
When you have found a perfect location, done all the paperwork, paid your first mortgage payment and got the property ready – it is time to bring people in there. Perhaps, you already thought of the target tenants when buying a house, so now you just need to find them. Having a right and responsible tenants may save you a lot of trouble.
If you want to be secure, check the tenant’s background and ensure he/she is able to pay the monthly rent. Always check the references. There are plenty websites available that enable to review tenants’ profiles. This could give you some basic information about the person who may live in your property. Furthermore, you are allowed to ask your prospective tenant for an ID, current address, proof of credit rating and a reference of previous landlords.
If you have some spare money and do not wish to have this hassle you can use an agency service.
Don’t forget your responsibilities
Remember that when deciding to become a landlord you commit to certain responsibilities, especially when you are self-managed. Once the tenants move in you must take care of all safety of gas appliances, heating and water systems, kitchen and bathroom installations and all repairs around the property.
Set up utilities
No one likes speaking to the utility providers, neither you nor your tenants. Why not choosing a trusted service that will take care of utilities in your property? Securing this way you and your tenants from unexpected bills and problems.
Keep the records
Last but not least, keep the records! Detailed record-keeping can turn out beneficial in terms of landlord tax breaks. Also, visit the property regularly and keep it all under control.