Secure your finances
The more mortgages you have, the more you will be affected by the fluctuations in interest rates so its wise to shop around for the right finance package. This will ensure investment returns yield enough to adequately cover your mortgage repayments as well as paying for any repairs and allowing for any void periods.
Taxing questions
Owning more than one property will put you in the firing line for capital gains tax, and the rental returns are liable for income tax. To make sure everything is above board in this department then landlords need to make sure they declare the amount of rent received, the interest and capital mortgage payments and the capital gain made on the future sale of the property. It might be wise to consult a professional tax adviser who will be able to fully outline your tax obligations.
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For the longer term
Buy-to-let is definitely not for the short-term. Despite the rising cost of borrowing, property investment still shows excellent long-term prospects and both rental yields and house prices are steadily rising.
Pick your location carefully
Location is always the key factor when choosing an investment property. Good transport links and amenities close by are a necessity, whilst saturation in an area is also a key concern an abundance of rental properties in the area will have a negative impact upon demand. Risk averse investors may tend to choose established markets, while others will try their luck in up and coming areas in the hope of achieving greater returns.
Find the perfect partner
A bad tenant can cost a landlord both time and money. A careful screening process and proper tenancy agreement are necessary and references should also be sought. Using a letting agent will ensure that the latest legislation is adhered to.
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Balance your portfolio
Property investors should always be aiming to diversify as the best portfolio is never top-heavy in one particular area. Professional landlords should have a range of different properties targeting different tenants, ideally situated in different areas. Ultimately, diversification allows an investor to attain better risk-adjusted returns and benefit from economies of scale.
