A Buy-to-Let property can seem an attractive income investment when interests rate are low and the stock market is volatile.
But if you are considering investing in property there are few things you should look into before you go ahead, to ensure you know the risks as well as the benefits.
Also you need to be aware there are changes planned from April 2016, tax relief will be axed on buy to let mortgages and landlords will have to pay an extra 3% stamp duty on property purchases. (See last month’s blog)
- Research the market
Investing in Buy-to-Let involves committing tens of thousands of pounds to a property and usually taking out a mortgage. For many people, investing in property has been very profitable both in terms of income and capital gains but it is essential that you are aware of the potential advantages and disadvantages. When house prices rise it is possible to make a good gain above your mortgage debt, but when they fall, it is your deposit that takes the loss and the mortgage stays the same.
- Buy to let mortgages
Buy to Let mortgage rates have come down but are still higher than the mortgage rates offered to owner occupiers. There can also be very large set up fees and a larger deposit may be required, so shop around to get the best deal.
- Do the maths
Before you think about looking around properties write down the cost of houses you are looking at and the rent you are likely to get. Use a Buy to Let mortgage calculator to work out monthly repayments but don’t forget to factor in mortgage set up fees and maintenance costs of the property. Another consideration is what would happen if the property is not rented out for a month or two?
Once you have your costs you can set it against the potential rent, to decide whether your investment is viable.
- Who are you targeting as your tenants?
Who would you like to live in your investment property and what do they want? Young professionals will want stylish and modern, students will want somewhere easy to keep clean and a family will need lots of storage and the potential to bring some of their own furniture.
- Choose an area with potential :
This means choosing an area where your targeted tenants would like to live – if they are young professionals is the property close to good transport links, or if it is a family are there good schools nearby?
You need to match the kind of property you can afford and want to buy with locations and styles that people who would want to live in those homes would choose. Getting all these things right is important if you are going to gain from investing in a Buy to Let property.
For friendly and down to earth advice on investing in a Buy to Let property, get in touch with a member of the Peter Robinson & Co. team today. Call us now on 0161 678 7996.