From finding the best location to getting the décor just right, here are the six steps every landlord should take before embarking on their first buy-to-let venture
In England in 2022, there were 4.61 million households occupied by private renters. So, if you go about it the right way and make smart moves, there is a fair profit to be made from becoming a buy-to-let landlord.
Here are six pointers to buying your first buy-to-let property.
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Find a property in the right location
Location, location, location is an age-old adage when it comes to property, and it rings true when you are looking to make a healthy income through buying your first buy-to-let property.
Keep a look out to see if you are able to snap up a property in an ‘up and coming’ area at a lower purchase price. This will hopefully mean you start to see your rental yields increasing in future years as time goes by.
In addition, you need to think about getting a property in a location which fits in well with the sort of tenants you want to attract.
If you have a property clearly in the wrong location for your target tenants, you may have difficulty in renting it out, which will lead to you losing money.
Looking to attract student tenants? Get a property in an area that is popular with students.
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Weigh up your overheads vs returns
Buy-to-let mortgage interest rates are pretty high at the moment, so you need to work out whether your expected rental returns will cover your mortgage repayments and more.
Other factors including costs of third parties – for example letting agencies managing your property – legal fees, renovation, and stamp duty will also have to be things you consider when analysing your overheads.
Ultimately, any first-time buy-to-let property investor needs to get their overheads versus returns calculations pretty bang-on if they want to make it a successful business venture.
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Check your mortgage lender’s conditions
Most first-time buy-to-let landlords will need to take out a mortgage, that is unless you are fortunate enough to pay upfront with cash. However, it is essential to check your mortgage lender’s conditions as well as whether you can get a standard mortgage or a buy-to-let one.
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Swot up on your responsibilities as a landlord
Before becoming a landlord for the first time, you need to first be fully aware of all your responsibilities. The legislation affecting landlord responsibilities towards tenants differs somewhat in England, Wales, Scotland, and Northern Ireland.
Landlords’ main responsibilities towards tenants include:
- Taking care of repairs and maintenance including the structure and exterior to ensure the property is kept in good condition for tenants
- Allowing tenants to have the ‘peaceful enjoyment’ of the property while they rent it – this means asking tenants’ permission at least 24 hours before performing property inspections
- Fulfilling any landlord commitments stated in the tenancy agreement
- Putting tenants’ deposits in a government-approved scheme
- Ensuring the property adheres to electrical, fire safety and carbon monoxide regulations
- Providing an Energy Performance Certificate
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Take out specialist landlord insurance
Any manner of things can happen when you are renting out a property. So, when purchasing your first buy-to-let, cover your back for a wide range of eventualities by taking out a comprehensive specialist landlord insurance policy.
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Think about the sort of tenants you want to attract
You need to think about the types of tenants you want living in your new rental property. Maybe students? Families? Professionals? Couples? Elderly? This is important because you will want to make suitable preparations for tenants, such as decorating and furnishing, according to what you feel will suit them and their lifestyle.
Want to attract students? Get some comfy sofas and chairs to relax on, chairs, storage, and a dishwasher and washing machine.
In general, make an effort to show your tenant target audience that you have put a lot of thought into what they may enjoy in their living space while trying to stay within budget.
As previously discussed, the sorts of tenants you want to attract will also influence your decision on the location you decide to purchase your first buy-to-let in. Different locations and neighbourhoods will be attractive to different types of tenants.
This article was provided by CIA Landlord Insurance
