With mortgage rates at record lows, investing in the buy to let market on the surface looks an attractive opportunity, with the potential of great return on your investments. However, as with with all investments come the commonly made mistakes that can have a detrimental effect on your investments. These mistakes are often overlooked during the exciting prospect of entering a new investment.
If you’re considering investing in your first buy to let property, or adding to your exiting property portfolio, this list of five things to avoid created by our Residential and Commercial Property specialist will certainly be of use.
1. Avoid Investing Without Enough in the Bank
So, you’ve spent months or years saving for that cash lump sum to purchase your first buy to let property, or maybe add to your existing collection of properties.
Or perhaps you have received enough money through other investments, or family members, and are considering investing this into the buy to let market.
Either way; this is a particularly exciting prospect, and one that can sometimes be a little overwhelming. Sometimes the thought of investing in what can often be an opportunity that provides great financial return can overwhelm many and certain financial considerations are overlooked.
It’s important to remember having enough money to purchase the property is only one aspect of your investment.
You will also have to consider additional costs such as:
- The property potentially sitting empty for a period of time- known as a void period
- Costly maintenance issues
- Agency fees
- Purchasing safety certificates and meeting various regulations
Remember- These will all impact on your return in investment, so it’s important to consider this before investing in the buy to let market.
2. Avoid Investing Unless You Know Your Market
As with any investment, you must be aware of the market by conducting the relevant research.
Are you aware of the potential risks involved in the buy to let market? Are house prices likely to fall/rise in your chosen area? Is there a demand for rented property where you’re choosing to invest?
More often than not, the best advice you can receive is from those currently invested in the market- known as quantitative research.
If you know someone who has already invested in the buy to let market, their first hand knowledge and advice will certainly be of use. Alternatively we are certain a member of our team will be more than happy to discuss any concerns you may have.
Remember- carrying out research prior to making your investment will help you make more informed decisions, increasing your chances of your investment being a successful one.
3. Avoid Investing Unless You Know Your Ideal Tenant
Before purchasing your buy to let property, consider who would be your ideal tenant; this will then help you to determine if the property in which you are investing will appeal to them.
This will also help when it comes to the interior/exterior of your property after you’ve made your purchase. If you are attracting parents with a young family- is the home child friendly with safe outdoor space, located away from any busy roads?
Or maybe you would like to invest in a property attracting young professionals? Modern interior with potential to add a personal touch, located in or around a city will attract many young professionals searching for a rented property.
Remember- A happy tenant who is able to make a house a home is much more likely to stay at your property longer. A welcome relief to any landlord.
4. Avoid Letting Maintenance on the Property Slip
Carrying out regular checks on your property and ensuring its overall maintenance is essential in ensuring your tenants are happy.
If you have several properties to manage, this can often prove both a timely and costly task, but one that that absolutely needs to happen. Whether you conduct your maintenance checks through an agency or by doing so yourself, be sure to act fast by looking after your tenants and in turn they will then take care of you.
Remember- This is a common area of dispute when it comes to landlords and their tenants, avoid this by ensuring maintenance is kept up to date and your relationship with your tenants will be a happy one.
5.Avoid Penalties or Even Harm to your Tenants
Your property needs to be safe for your tenants. There are EU safety requirements in place for all buy to let landlords when it comes to electrical appliances in the property.
There are five key checks you need to make in order to maintain your property to legal standard.
When purchasing a buy-to-let property, consider the following:
1. Is the property fitted with mains-operated smoke alarms?
2. Does the furniture comply with the Furniture and Furnishings Fire Safety Regulations?
3. Any gas appliances such as the boiler must be checked at least annually.
4. An EPC (Energy Performance Certificate) must be obtained. This document comes at a cost of £50 but is absolutely essential in Letting or Selling your property. Your property will be assessed and given a rating between A to G, A being the most energy efficient and G being the least.
5. Does the property comply with the Housing Health and Safety Rating System?
Ensure to check the property for any form of hazard, e.g mould/damp, not enough natural light, quality of water supply.
Remember- Annual checks must be made on all appliances and all tenants provided with a safety check record. Failing to do so will lead to costly fines or imprisonment and in some extremely unfortunate instances, harm to your tenants.
We are here to help
Whilst we hope the above tips will prove useful, sometimes it’s inevitable that you may reach a situation whereby you require professional advice.
Our experienced team of property solicitors understand that each person will have varied needs and requirements, and provide a unique approach to each client. They are experienced in working alongside you and will guide you through what can often be the complex process of conveyancing. If you would like to speak to a member of our team, you can contact us via our online enquiry form or call us 01202 292 424