With investment properties on the rise and an ever-growing demand for rental properties, it’s clear that we haven’t lost our appetite for buy to let. We have come up with lots of tips and advice in our new mini-guide to the world of property rental:
Most modern apartments and houses will have fairly straightforward layouts, while older buildings may have awkward chimney breasts, stairs, and rooms through rooms. If you can change the layout easily, that’s a good way to increase its appeal to tenants. For example, it’s often worth moving a bathroom upstairs from the lean-to at the back or creating a kitchen/diner from a small galley kitchen and dark back room. Stick with what people expect.
- Size matters
This depends on your target tenant. If you are after a single professional, you might consider a small flat, maybe even a studio, in a good, central area. If you want a family, for a longer-term let, you might look at three-bedroom properties, a larger home with more square footage, or a house in the suburbs. Studios or one and two-bedroom flats are often easier to let and appeal to a wider audience.
- Cash to spend
So you have got a bit of money in the bank and it is not gathering much interest. If stocks and shares are an unknown country to you, maybe bricks and mortar is the answer. First of all, do your homework. Decide how much you’ve got to spend, whether you can do any repair work yourself, whether you want to deal with the tenant yourself and how much it will cost if you don’t. Research mortgage options and calculate your likely profit. Only then are you ready to go out and start spending.
- Location, location, location
If your own area is too expensive, then look further afield. The key to a great buy-to-let is having it somewhere where people want to live. A city/town centre location, close to transport links or handy for shops – all these will help drive tenants to your door. You might have to weigh up negative aspects against the initial price but remember that a takeaway restaurant next door will limit your rental even though the property might seem to be a bargain. However, it’s worth considering a cheaper road near to a popular area as the rent will be similar.
Top Tip: look out for commuter hot spots (near good transport links: bus routes or tub stations) along with high-end stores.
- Add value
Even if it is not going to add to your rental income, it’s often worth making improvements such as those mentioned above. They will add value when you come to sell, and it makes the house easier to let. Other improvements to consider include a new bathroom or kitchen and creating extra bedrooms. Spend money on making it as maintenance-free as possible which will save money in the long run.
- Talk to the professionals
Will you be doing the work yourself or employing tradespeople? Weigh up the cost, the time it will take, and whether you are capable. Unless you are used to DIY, it’s probably quicker and cheaper, in the long run, to get somebody in. Boilers and electrical work will need to be signed off by a suitably qualified person. Cheap workers who are available immediately might not be the best option. A skilled worker can often do the work in a fraction of the time. Get recommendations from friends, if possible.
Don’t spend too much money on decoration. You won’t be living there. Unless it’s a top-end property, avoid expensive and unusual finishes. New carpets throughout can change the feel of the property. Add a decent underlay, haggle a little, and you can achieve a good-looking finish without an enormous outlay. Replace avocado bathroom suites or damaged kitchens. You might get away with new cupboard doors and fresh grout in the bathroom. Clean up or replace socket fronts, light switches, knobs, and taps and the property will look as good as new.
Give everything a good clean. Bathrooms and kitchens should be sparkling. Doors and windows are easily wiped down. If there’s a garden, clear it. If you’ve got time to seed it, do that. If not, use turf, decking, or tidy up existing paving. Replace fences and fix broken glass in sheds. Kerb appeal is crucial when you are selling a house and tenants are no different to buyers in their responses.
- Leasehold or Freehold?
Freehold is always better. It means you have more control. In theory, leasehold could mean maintenance charges are spread across the building and in practice, it may mean you have to deal with somebody else to get things done and agree on costs. Read the lease carefully. Renegotiating the lease should be a condition of the sale if you are in a good position to buy.
- Hidden costs and void periods
You need to be able to cover your costs if the property is left empty for a couple of weeks or months, or if the tenant gets into rent arrears. If the tenant fails to pay the rent, it may take months to get them to leave. You can get landlord insurance to cover this. And once the tenants have vacated, you might find you need to redecorate before you can let the property again.
- Furnished vs Unfurnished
This depends partly on the type of property you are letting. But if you are going to furnish it, you need to be aware of fire regulations. That means you can’t just go down to the junk shop and buy a sofa. You need to be sure it conforms to fire safety rules. Check labels. You also need to consider durability, so buy soft furnishings with removable, washable covers. Mattresses can be covered, too. You will also need to fit carbon monoxide and smoke alarms. Tables, cabinets, and wardrobes shouldn’t be too flimsy. Make sure the property is safe, reliable, and comfortable.
- Tax and Capital gains
Make sure you have factored in paying your taxes correctly and don’t forget you will be charged capital gains when you sell the property. Save your receipts as you can claim against tax when you eventually sell. Redecoration between tenants, however, does attract tax relief.
- Good relations
It is key to get on with your tenants. Treat them well, and communicate effectively, then you are likely to find the sentiments reciprocated.
Looking for the perfect buy to let property?
Get in touch and we will show you a selection of perfectly suited homes on the market.