Buy to Let properties are still a good investment that could bring you a good return on your money now and help you build a nest egg for your future retirement.
With all investments, you should do your homework before putting any money into it and buy to let is no different. With this in mind, we’ve put together this guide which will make your research a little easier. Without further ado, here’s our list of ten tips that will help through the purchase of your first buy to let property.

Seek professional advice.

An independent mortgage advisor should be one of your first considerations. There are some key differences that set buy to let mortgages apart from a standard property loan that you will have used to buy your own home.
The application for a buy to let mortgage will not only assess your ability to pay the mortgage based on your own income, but also on the likely rental income from the property. Lenders have tightened up their lending criteria to minimise risk and also because of government legislation, so it’s a good idea to discuss your plans with an independent mortgage advisor, who will present you with buy to let mortgage advice based on your circumstances

Choose a property that is ready to let

It might sound obvious, but crucial to the success of your buy to let business, is getting a tenant into your property as quickly as possible. Remember that you will be responsible for the mortgage payments on the property whilst it remains empty.
This should guide your decisions over the property you buy. Run-down houses might come cheap, but they might take 3-4 months to get into a habitable state. If you cannot complete the work yourself, you’ll need to hire a contractor to do it. Contractors usually have a number of jobs in the queue, so finding one that can start immediately will be difficult.
For an easy start to your buy to let business, we’d recommend that you find a property that just needs a lick of paint before your first tenant moves in. Obviously, you’ll pay more for property that is ready to let and that will reduce the yield on your investment, but you will minimise the risk of having to fund the house from your personal income.

Use a letting agent

You may be reluctant to use a letting agent to help you manage your buy to let property. After all, they’ll be taking a commission from your rental income, which might make margins a little tight.
There are, however, some really good reasons to use one. Firstly, you are new to the buy to let market, whilst they manage a large number of properties. Like the Independent Mortgage Advisor, they know the market inside out. We’ve listed a few of the benefits below.
A letting agent will likely have a list of prospective tenants that are looking for properties, minimising the time it takes to get someone into your home and taking away the need for you to advertise the property.
Like an estate agent, the letting agent will show prospective tenants around the home, so you don’t have to take time out of your day job to do this.
Your letting agent will take care of Checking the immigrations status of tenants – explained here in this Citizen’s Advice Bureau article. With a £3000 penalty per tenant not entitled to live in the UK, this is an extremely important responsibility.
The letting agent can hold the deposit of your tenant, as is required under the Deposit Protection Scheme – explained here on the .gov website, meaning you don’t have to.
Using a letting agent doesn’t have to be a permanent thing. You will usually be required to sign up for a minimum term with the letting agent, but after that time, if you feel able to, you can take on all these responsibilities yourself and increase your profit margin.

Research your ideal tenant and the type of property they’re looking for

It’s a consideration that too many landlords leave out of their planning. For first time buy to let landlords, it’s a good idea to choose young families. Generally speaking, they make good tenants who are looking for a property they can live in for a few years whilst they raise their family and save for their own home.
Letting out to students may seem like a good idea, with potential for increased rental income by letting out individual rooms. Remember that students are a higher risk for things like non-payment of rent and damage to property. We’d strongly advise against student lets until you have been a landlord for some time, with a number of properties in your portfolio.

Prepare for a rainy day and get insured

Becoming a landlord brings certain responsibilities with it. You need to ensure that you have the means to carry out repairs on the property. If things like the boiler break down, your tenant will call you and expect you to arrange a repair or replacement immediately.
If you are using a letting agent to manage the property, you may be covered for this and they may take care of the repair. Check this with your letting agent when you first discuss the management of your property. If it isn’t in their standard package it may be a ‘bolt on’ service that you can pay an additional fee for.
Should a minor catastrophe occur, like a flood or a fire, you’ll be required to re-house your tenant. Obviously, the costs of this could be extensive, before you even begin to get your property repaired. That’s why landlord insurance is an essential expense that you must budget for. As always shop around for the best deals on insurance and also make sure there isn’t a crossover with your letting agent’s insurance.
For personalised advice on getting started as a buy to let landlord, contact Search Mortgage Solutions on 0800 756 7794, we’ll be happy to discuss your plans for your buy to let business and help you through the process.