Buy-To-Let Buying An Investment Property

Buy To Let Investment Property

I Want To Buy An Investment Buy-To-Let. What Is The Process?

When buying an investment property Buy-To-Let here are so many factors that have to be taken into consideration, many new investors may speak to other investors, accountants, or do their own research but the process needs to be thought out very carefully and not rushed. 

There are many stages that a buy-to-let investor will have to decide and have the right infrastructure behind them to make sure that this is a smooth process.

Buying An Investment Property To Rent

People buy investment homes for a number of reasons.  Some because they have spare funds either saved or they may have inheritance that they feel is not making any real gains in the bank as interest rates are very low.  

Others step into being landlords because they think it’s an easy way to make extra money each year. The reality of this is that being a Buy-To-Let landlord and investor is not easy, however, if it is carried out the right way it can be a fantastic pension for you and your family.

Buy-To-Let Mortgage On Your House

Don’t rush out and look at property!  

First many first time landlords start to look for a new investment before they have sought advice from a mortgage broker, bank, or finance house or alternatively look online. 

There are many companies that offer buy-to-let mortgages and it’s worth taking the time to try and get the right deal for you. When financing your new buy-to-let house the rates are always changing. 

There is a mixture of different things that need to be in place, not just what the buy-to-let mortgage is going to cost you on a monthly basis, but the yields that you will make ie the percentage of income. Remember the bigger the deposit you pay the less the mortgage will cost you on a monthly basis.

What Needs To Be In Place? The Dreaded Stamp Duty

The first thing is how much will you want to spend on a buy-to-let property, this you will have to consider first, the more you spend the more you will need to pay in stamp duty here is a quick reference to stamp duty rates in the UK

Stamp duty has to be paid on every property purchase throughout the UK so this will need to be factored in when buying a house. You will also need to cost out the legal fees with a solicitor as he will charge you a certain amount for the conveyance, ie the purchase.

Location Of Your Buy-To-Let Purchase

When looking to buy a house look at areas carefully.  See where train stations are, colleges, universities, supermarkets, and other amenities.   Take into account easy access routes to town centers, quiet roads, cost of parking, council tax bands, etc these are all key to having long term tenants remain in your buy-to-let, the easier it is for a tenant the better.

Should I Buy A House Or Buy A Flat?

This is really up to the individual however remember this, a house will normally be a freehold, this means that once you have completed the purchase of your new buy-to-let house then there will be no hidden extra costs, for example, service charges. 

What is a service charge?  This is a charge that all residential flats and apartments have which is payable by the leaseholders to the managing agents of the building or the freeholder of the building on a quarterly basis, this includes insurance, maintenance of communal gardens, upkeep of internal areas for example decoration, flooring, lifts, windows, and any other items. 

Take note that when starting the buy-to-let process all these factors must be taken into consideration, as this will affect your bottom line income.

Condition Of The Property

There are two ways to look at the condition of a property when you decide to buy a house or buy a flat. 

Firstly if you decide to buy knowing that the property needs work i.e. redecoration, replacement kitchen or bathroom, flooring, appliances, etc then this will need to be factored into your initial costs.  

You will also have to look at time scales.  What I mean by this is the longer your buy-to-let property is not rented the longer you will not be receiving an income the longer you will have to pay the mortgage.  

If you decide to purchase a buy-to-let that is in good condition then you will be able to start renting your home immediately. 

Please also note that it is best not to furnish as some tenants renting homes have their own furniture you can always agree on this at a later date. 

Choose Your Buy-To-Let House Carefully

Remember these words Don’t Fall In Love With The Property what I mean by this is remember this is an investment and a home to rent and not a home that you will be living in. 

Purchase wisely. Remember the more bedrooms the more rent you will achieve for the buy-to-let property.  If the property is clean and tidy don’t start changing it because you don’t like it. Remember you are not living there, it’s a business.

So What Will I Need To Start To Rent My Home

Below is a checklist of items that must be carried out to ensure that your rented home is up to standards, some of these items will be looked at on survey, however when viewing your buy to let property make a list and look at each item as this will save you time and money.

Make sure you have adequate locks on windows and doors BS standard

Make sure that all smoke detectors are working, they have a shelf life so check them even if they are mains wired.

Check the plumbing and heating for any leaks. Run the boiler 

Make sure there is a current up to date gas certificate on the boiler this is required by law, find out how old the boiler is as a replacement boiler can cost you the landlord a big chunk of your budget if this needs to be replaced before you rent your home.

EPC is an energy performance certificate that is to rate the house in relation to energy this is required by law before you place the house on the open market for renting.

Make sure all appliances work, when buying a buy to let property test everything as replacing these after your purchase has completed can be very costly.

If you are considering buying a rental home please contact Robert Alan Homes on 0208 986 2222 or provide your details on our contact form and our team will be more than happy to guide you through the process, to make your life much easier.

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