Buy to let is still key to retirement plans for many – with the prospect of rents or a capital lump sum from selling a property supplementing pension income attracting many with little faith in other forms of saving.
Like any investment, buy to let has some nuggets and some fool’s gold – and here are some quick tips to help you choose the right property: –
- Steer clear of ‘property finders’ offering guaranteed returns. The Advertising Standards Authority is cracking down on these charlatans on the grounds that no one can predict a return in advance and that offering a guaranteed yield is misleading
- Research the market – like any other investment, you need to have some knowledge of what you want – like where you want to buy and why, what prices homes fetch and what rents are like.
- Have a clear tenant persona in mind that complements the neighbourhood where you intend to buy – consider whether your tenant will be a young couple, family, students or sharers
- Do the math – your rent must cover property business costs and have some margin for unforeseen costs like repairs and interest rate rises
- Think about parking, public transport, schools, the local uni, shops and other amenities that your tenants are likely to want when you buy
- Clear your head of whether you like the property or not. You are not living there – that’s why you need to have a tenant persona in mind when you buy
- If you want to let to sharers or students, check with the council to see if you need planning permission or a licence. The requirements vary from place to place, and can even apply to some streets and not others
- Think about landlord accreditation with the local council or university
- Always take tenant references before they move in – and if you want a guarantor, pick someone who owns a house so you can secure a court judgment against them if they refuse to pay
- Letting agents have a wealth of knowledge about the local market – but don’t buy from the agent who is giving you letting advice as they have a vested financial interest in the deal going through.
Don’t forget buy to let is a long term investment – that means at least 10 to 15 years. If you are looking for a quicker return, consider property development or some other investment.
