What you need to know before becoming a landlord
Buy-to-let is becoming ever-more popular and the appeal of having a project to work on and earn good money off is desirable to many people. Buyers can purchase a relatively cheap, run down property and turn it into a house that can be rented by tenants and offer quite a bit of money.
Rental properties can be an exciting investment, but it’s not always easy being a landlord. Here are some things to keep in mind before taking the plunge into the world of buy-to-let:
Have money to make money
The idea of investing in buy-to-let is that you make money. But you need to have money to make money. If you don’t have enough start-up capital, then the chances are you could end up in a bad situation.
If you don't have enough money to start with, then you may not get anywhere with your investment. If you must take out a loan, then you are in a riskier situation and will have to focus on paying that back before making any profit. Try and save up as much as you can before investing in buy-to-let.
Consider your tenant
Depending on the property that you invest in, you will attract a certain type of tenant. You need to decide what sort of tenants you want to attract when you rent the property out, and then make your purchase based on that.
If you are buying a terraced house in a popular university town, then you are most likely going to attract students. If you buy a small cottage in a countryside village, then you are most likely going to attract small families or elderly couples.
You won’t get all the money
Don’t think that once you rent out your house you will get all the money. It’s not that simple, and there are any other finances to consider. Renting out a property is considered to be an income, so any profit made will be taxed.
You need to make sure your financial accounts are in order, and check that you are correctly insured. There are lots of sites online that will help you to compare different landlord insurance, so it’s best to take your time and get the best deal possible.
Be responsible
Unfortunately, there are many dodgy landlords in the buy-to-let industry, so you need to make sure you are taking the situation responsibly and not planning on cutting any corners - it won't be good for you or your tenants.
Do up your property properly and don’t rip people off - you need to treat tenants right to keep them happy. There is nothing more stressful than constantly having to look for new tenants and being a good landlord will ensure your tenants will look after your house and be loyal to you.
Be prepared
Don’t think that once you have done up your property and rented it out that the work stops there. Being a landlord takes a lot of time and effort, and if it was really easy then everyone would jump on board and do it.
You will have to deal with lots of different people, including letting agents, tenants, builders, plumbers, and the taxman. This may over a period of time, but it could be all in one day, and you need to be prepared for that.
If you’re thinking of becoming a landlord, or searching for a buy-to-let, get in touch! Our expert team can help you.