Investing in a rental property is always a good idea. However, investing in a profitable rental property is what makes a property investor successful! If your buy to rent property investment is not profitable, you might think about selling it to earn a quick buck. But, before you book a property valuation to sell your property, how about you improve your buy to let property to make it more successful.
Follow these top 10 tips for buying to let you succeed in the future.
1. Invest in the right location
When it comes to investing in rental properties, the location is everything. If you invest in an area where the demand for rental properties is high, you will certainly be able to make a profit. Consider investing in areas with a high student population or a city with a high number of professionals, as rental properties are always in demand in such areas.
Regeneration is also an essential factor to consider. According to UK property investment company RWinvest, cities like Manchester, with ongoing regeneration projects transforming their area, produce a huge economic boost and create more diverse options for properties to purchase or invest in.
2. Figure out the net returns
On paper, a property might sound profitable when you compare the monthly mortgage to the monthly rental. But, what about the monthly costs and expenses? Before investing in a property, consider the net returns and not just the gross returns as that will give you a fair idea of how much money you will earn from that property.
3. Always have landlords insurance
There are a lot of things that can go wrong with a property. Water damage can cause irreparable damage, a fire can break out, a natural disaster can ruin the property and theft can leave the property almost empty! To safeguard yourself and your property, always get landlord insurance.
4. Choose the right agent
A good agent will help you choose the right area and invest in the right property. Also, a good estate agent will be able to help you find potential tenants and they might even be able to connect you to the right plumbers and electricians as well as any other tradespeople that you might need.
5. Treat it like a business
Think of your buy to let investment as a business. When you make money, you need to mount money back into the business. When you make a decent profit, you might need to put some money back into your property to spruce it up. If the property is not doing well, you need to cut your losses. At the end of the day, a buy to let property needs to help you make money, just like any business.
6. Decide out your long term plan
Do you plan to sell this property in the future? Are you going to move into this property at some point in time or will you always give it out on rent? Do you want to hold on to this property for the long term or the short term? If you have your future goals in mind, you can make decisions accordingly.
7. Get a good mortgage rate
At the end of the day, your buy to let property will be profitable if you can rent out the place for more money than you are paying as the mortgage. For instance, if the monthly mortgage is £800, you should be able to rent out the property for £900 or more, otherwise, you will not have any money left after paying the monthly expenses. To earn a profit, you need to get a good mortgage deal.
8. Figure out who will manage the property
If you are planning on managing the property by yourself, then you should buy a property that is close to where you live. If you are planning on outsourcing the management to a real estate company or a freelance property manager, then you need to account for the expenses.
9. Try to buy new properties
With a large number of rental properties available in the market, tenants have a variety of options to choose from. It goes without sharing that a potential tenant will choose a newer and nicer place as opposed to an old run-down property. So, when you are investing in rental properties, try to invest in newer properties. That way, the maintenance and repair cost is low and the demand among tenants is high.
10. Choose good tenants
A good tenant is very important to ensure the success of a rental property. After all, if your tenant doesn’t pay you on time or if your tenant causes damage to your profit, it is only cutting into your profits. Always do a background check on your tenants and try to choose tenants that are suitable for you and your property.