It seems spring has finally arrived but the continuously bad weather of the long, dark winter did result in a slight increase in the number of maintenance calls on our rental properties. I like to ensure all of our properties are maintained to a high standard to provide great quality accommodation to our tenants and prevent ongoing maintenance costs. But some things cannot be foreseen and that is part and parcel of property management. From fallen fences to frozen pipes, this winter has felt eternal.
Over the years I’ve been managing properties, I’ve built up some knowledge of what to focus one when refurbishing buy-to-let investments and also what it is sensible to prioritise in terms of ongoing maintenance. The top priority is ensuring that refurbs are done to a good standard but also are very durable to minimise long term maintenance.
Of course, many new potential investors are reconsidering even taking the plunge. Investing in bricks and mortar can still be really profitable but all the new taxation schemes attempting to reduce landlords profitability, is making people think twice. And rightly so. Currently, interest rates are low and mortgages are relatively cheap, but how long will that last? Interest rates are predicted to rise and the stamp duty surcharge for buy-to-let property owners will eat into profits. Which makes many investors baulk at the prospect of expanding their portfolios. So what should you consider before investing? Applicable to those investors just starting out in property investment or those who already own properties, here are a few buy-to-let hints and tips:
If this is your first property investment, do your research. Explore all viable options for investing your money – not just property. It might sound odd coming from me, but property investment is not for everyone. There is a certain amount of risk and often plenty of reward, but you have to do your research, have a coherent plan and manage your finances to establish an end goal and achieve your vision. If you buy a property with a vague idea of renting it out, you are more likely to lose money because of hidden costs and poorly executed decisions. You have to go into property management with your eyes open. Depending on your experience, knowledge and how quickly you want a return, something like a high-rate savings account might better suit your needs. All I’m saying is knowledge is power, so do some investment research and be sure buy-to-let is the right option for you.
Probably one of the most important factors in property investment is getting to know the location of the property. If you want to achieve a decent rental return and most importantly, ensure you have a strong tenant market, you need to know the geographical area. Put simply, the location of your property can make or break the success of your investment. Examining the local area will inform so many of your decisions, from your target market to your renovation specification, rental rates to marketing choices. Things to look at include the density and demographics of the population, proximity to public transport, nearby road links, local schools or colleges, and planned developments which might affect the value of your property long term. Even if you were to complete a really high quality renovation, assuming a property will let is dangerous and I strongly advise against it. Determining your target market and so knowing who you are going to rent to, is incredibly important.
It sounds obvious but dedicate time to financially planning your property investment. There are several things I would include in this remit. Firstly, mortgages. Shop around and get good advice, I have some great people that can help you with this, so let me know if you need a broker.Buy-to-let mortgage lenders typically want rent to cover 125% of the mortgage repayments and require at least 25% deposit. There are also mortgage arrangement fees to consider. These could impact your bottom line. Something else you need to have contingency for is the property being empty for renovation and possibly during marketing. Rental voids where the property is empty either for renovations or between tenants, is something many landlords fail to consider.
On the topic of renovation, please don’t skimp. Of course use your budget wisely and absolutely refer to your locality research to inform your priorities for renovation. But as I said at the outset, providing a good quality home will not only keep tenants happy but will reduce ongoing maintenance costs (something else you should remember in your budget planning).
And finally, one of the biggest and most important questions is do you want to be involved in the day-to-day management of the property? If the answer is yes, then look at options for advertising, source documentation to ensure you are legally compliant and make sure you follow all the rules and regulations set out by the government. Their website is very useful for determining what your responsibilities are as a landlord and has specific guidance on things like Tenant Deposit Schemes. If you decide you don’t want to be involved in the day-to-day running of your let, then you need to factor this into your ongoing costs and choose an agent. Small or large, high street or independent, there are plenty to choose from.
At Home-Share lettings, we are unique in the way we work with our landlords to ensure a personal and bespoke service. Whether you are a seasoned investor or thinking about making your first buy-to-let investment, feel free to get in touch with me for some impartial advice. It doesn’t matter if you are with another agent, I will tell you what you need (but might not necessarily always want) to hear. Call me on 07944 726676 or email firstname.lastname@example.org.