Real estate has always been one of the safest investment havens for most investors throughout centuries. Investing in buy-to-let properties is one of the best ways one can start investing in real estate. It guarantees a monthly income in the form of rent while also giving you an opportunity to sell off the property when an attractive offer comes your way. And if you are planning to invest in a buy-to-let property, here are 6 points to keep in mind:
- Location Is Always The Key
As with any other investment property, location is the first and the most important thing you have to consider when investing in buy-to-let properties. There are two aspects to this. The first is the value of the location at present. If the property is located in an area which is heavily populated and there is strong demand for rental properties, it is definitely a good investment. The second aspect pertains to future demand. The current rent rate may be low, but if you think that the locality will develop in the next five years or so to the extent that you will be able to double or even triple your rent and pocket a nice profit, then that property is also a good investment.
- Think From A Tenant’s Perspective
Consider who is going to be your main tenant and look at the property from their point of view. This will help you determine whether it is wise to invest in it or not. For example, if you think that your tenants will mostly be families, then a pub near the property may be a deal breaker since it might be difficult to get a good rent from families in such a location. However, if your tenants will mostly be students from the nearby college or university, then the pub will not be much of a problem. In fact, it might even be an advantage.
- Calculate Profitability
When you calculate the profitability of a buy-to-let property, you have to consider the mortgage rates and maintenance costs. The rent you earn per month must exceed the total of both these costs. Only then can your investment be considered profitable. You also have to consider the cost of non-occupancy. So, when tenants move out and the property remains unoccupied, how much of a loss will you have to suffer each month? Will it become a burden if the house is not occupied continuously for three or more months? Such things also need to be considered when calculating the profitability of the property. And if you need to know about the valuations of properties in the UK, check out https://www.mouseprice.com/.
- Keep Your Greed In Check
Yes, you are investing in a buy-to-let property to make money. There are no two ways about it. However, make sure that you do not let greed come in the way of making wise investment decisions. Just because a property does not meet your excessive expectations of profitability does not make it a bad investment. Be realistic about how much you can earn in rent each month, how long will it take you to repay the mortgage, what the resale value of the property will be in five years, etc. Only then can you make sound investments.
- Consider The Negatives
When you are smitten by something, it is normal that you see only the positive side of it. The same is true for property investments too. There will be properties that you think is a ‘steal’. And your excessive desire to acquire that property can block your mind from seeing the negatives of it. So, always keep a steady mind when checking out various buy-to-let properties. Always consider the negatives of the property together with its positives. This will help you make a wise decision regarding its purchase.
- Property Management
Finally, you also have to decide how you are going to manage the property. You will have to find tenants, collect payments, handle property tax payments, and a host of other things. If you are busy with your daily work, then this can become stressful. Under such circumstances, the best option is to assign the management of the property to a third party. Once done, they will handle everything related to your property and you will never have to involve yourself in its affairs. The monthly rental amount will be deposited into your bank account like clockwork. However, the third party will charge you a fee for their services. So, keep this in mind when you consider hiring a person to manage your buy-to-let property.