Buying your first property is a milestone, and those who have already passed it will remember the combined feelings of excitement and anxiety. The prospect of buying a property is exciting and opens up all sorts of opportunities for the future. It’s the beginning of a portfolio and if managed properly, a profitable empire. There are however a lot of questions to be asked when purchasing a new property. Here are a few tips to help first-time Landlords with their acquisition.
1. Research & prepare
Meet people in the industry, including other landlords, letting agents. You may also want to consider joining the National Landlords Association. Make sure you read up and do research. Go onto forums and see the problems that other people have encountered. Gather some crucial literature too!
2. Delimit your requirements
Be decisive as to what kind or property you want, what kind of tenants, how big you want it to be and of course, where you want it to be. With properties in London being exceptionally expensive, you stand a better chance of getting a better yield if you look outside the M25.
3. Look for better offers
You can be sure that you’ll find a better mortgage rate than the one you’ve been given. If you’re getting a buy-to-let, choose a reasonable 3.3-3.5% rate. Any more than that and you’ll be being fleeced. Make sure that your rent is appropriately priced too. Look at various area yields to get a better idea.
4. Plan to save
Once you’ve determined a realistic monthly profit from your buy-to-let arrangement, what are you going to use it for? Make a plan, and have a contingency in case things go wrong. It is always good to have capital to replace things like broken washing machines and so on. Also, consider what will you do if your tenant becomes unemployed and can no longer afford rent. What will you do if there is a flood? Create a contingency plan and prepare to use your saved funds. Also, make sure you have bought the appropriate landlord insurance or property insurance to cover you against all eventualities.
5. Tenants = Customers = Customers Come First
If you’re looking for professionals who will pay that little bit extra rent, decorate to a high standard. Make sure its neutral, and decorated how your tenants would like it, not how you would like it. Anything too avant-garde may put certain tenants off. Also, be reasonable with rent increases. Whilst rent increases are sometimes necessary, charging too much will drive your current tenant away once the contract is over. It is also less likely to endear your tenants, leading to potential problems with rent-payments and house condition. Providing your tenants with a magnified sense of entitlement may be more costly than the rent increase. It may also have long-term repercussions and you may be less likely to get future tenants.