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Buy-To-Let : 7 Essential Tips For The New Landlord

At Redstones we are often approached by property owners new to the buy-to-let market for advice on where to invest their money. One of the most common – and concerning – themes we see is the lack of research carried out by would-be landlords.

Figures recently released by the ONS (Office of National Statistics) reveal that the average buy-to-let investor in the UK has a property portfolio with a value of around of £650,000.  With an average gross yield of 5.6% year-on-year, this would increase the value of the portfolio to £1.63m over the next 15 years.  A 1% yield would increase the value of an investment by c£80,000 but to achieve this, research is essential.

A buy-to-let property portfolio doesn’t suit a ‘one-size-fits all’ approach.  If you’re confused about your options, here are our top seven tips:-

Research your market : Be sure that buy-to-let is the right investment for you.  Would you money yield a better return in another investment, such as a franchise? While the market is buoyant now, property values can fall as well as rise and much is dependent on the location of your property. Potential landlords seeking to build a portfolio should research the market thoroughly to understand the pitfalls as well as the potential of entering the private rental market.

Talk to other landlords : Get to understand what it takes to be a landlord, not only from the financial investment but the personal and emotional investment that goes into letting out a property. Talk to other landlords or lettings agents about the trials and tribulations of a property owner.  Letting occasionally goes wrong so you must decide on whether you have the right temperament for life as a landlord.

Choose the right area : By this we do not mean the most or least expensive but a location people want to live in, whether for the transport facilities, student life or for the schools.  Compare the property you can afford with the locations people choosing to live in that type of property would opt for.  While your local neighbourhood might seem a natural option, don’t rule out looking further afield.

Work out your finances :  What rental income will you be able to charge for the property you are considering? Will this cover your mortgage payments? What will you do if your tenant is unable to pay, if the house is empty for a while or if you need to find a cash sum for a boiler repair? Again, talking to a reputable lettings agent with an in-depth knowledge of the area you are considering will provide invaluable insight.

Get the best mortgage : Broaden your search for the best buy-to-let mortgage available rather than contact only your existing bank or building society.  Talk to an independent financial advisor to ensure you are getting the best deal available for your financial circumstances.  In response to our clients’ needs, we recently launched Redstones Financial Services dedicated to providing you with the best financial advice and products.

Consider your target tenant : You may love the house you are purchasing but will your ideal tenant? Young professionals generally seek modern and stylish properties, while students need comfort rather than luxury.  Families need plenty of practical living space to accommodate the different needs of family members.  Will you rent your property your property on a furnished or unfurnished basis? All of these questions need answering before investing in your buy-to-let property.

Talk to a lettings specialist : Will you go it alone or rent your property through a lettings agent? At Redstones we offer varying levels of service from introduction only to a fully managed property service. For landlords concerned about their tenant’s ability to pay their rent, we also offer our unique Platinum Total Care Service.

As a potential landlord, we understand that the first steps into the private rental market are often overwhelming but it doesn’t have to be that way.  At Redstones we are always available to offer advice.  Contact us today for answers you need.

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