The stock market can be unnerving, with low rates and a high level of volatility, people often back away from any potential situations that could result in a loss of money. A property however, is one asset that the majority of people feel more comfortable with.
Property investment can appear to be a very attractive long term financial venture, as the majority of people will buy and sell a property at some point in their life, so it's a situation they are comfortable with.
With buy-to-let booming in 2014, this is a great time to get into investment, but it is crucial to buy the right properties and manage them well. The key thing to remember, is that the property you buy is not for you to live in, it's all part of a bigger business deal.
Check out our top tips for first time buy-to-let investors:
Don't Restrict Your Area
You may be used to your own residential area, but that doesn't mean that it is necessarily best for rental value. It is important to do your research and choose a promising area that people will want to live in.
Think about areas that have potential and will appeal to the most people. Are there good transport links? Popular schools? These questions may seem obvious, but the last thing you want is to be stuck with a property in an unpopular area if you want to rent it out.
Do Your Research
You might think the whole “buy-to-let” thing sounds easy and straight forward, but you would be surprised. It is important to research the market and fully understand the potential benefits and pitfalls that could take place.
Read up as much as you can on guides to property investment and articles written from experienced landlords. Before you make the big leap, really make sure that buy-to-let is what you want to do and is going to be the best investment for your money.
Check Your Figures
It is easy to get instantly caught up in property investment and booking a number of viewings without first putting pen to paper. Before you view any properties, make sure you sit down and work out exactly how much the house will cost versus the rental yield.
With buy-to-let mortgages, lenders often require a deposit of 15 – 30% and the rental income to make sure 125% of the mortgage repayments are covered. A contingency fund is also important for any time when the house is not being rented.
Buy a Lettable Property
Choose a property that is going to appeal to those who want to rent it – two bedroom terraced houses and flats are the most popular. Avoid large family homes as they will have much less appeal to people looking to rent.
It is important to remember that you are buying the house for tenants, put yourself in their shoes and think about what their priorities will be. Younger tenants will want good nightlife, whereas older tenants may want to be near to a park and shops.
Decide How Much you Want to be Involved
Buy-to-let is one thing, but being a landlord is a whole other ball game. You need to decide whether you want to rent out the property yourself or if you want to pay an estate agent to do it for you. You will have to pay them, but they will deal with any problems.
If you want to manage the property yourself, you are going to need to be prepared to give up your evenings and weekends to organise viewings and undertake any repairs that need doing. There will be lots of individual costs that can occur at any time that you need to prepare for.