It’s not surprising that thousands of investors looking to secure an asset in the property sector opt for the Buy to Let investment option every year. It can generate an excellent second income as well as help to diversify a property portfolio. However, since countries across the globe have experienced economic downturn, many are questioning whether or not buy to let investments are still a safe bet.
The good news for many countries across the world is that the people who can no longer afford to buy are now looking for rental homes, creating demand in the market. Nevertheless, you should always make sure you carry out a significant amount of research before making a buy to let property investment. The best way to start is by looking into the economy, vacancy rates and infrastructure of the area you wish to buy in, as these will all affect your likeliness of finding a tenant. Then use a buy to let investment calculator – this will give you an estimate of the buy to let return on investment you are likely to receive through renting out the property.
Next, you will need to consider whether you will adopt a hands on or hands off approach to your property investment. Buy to let investors often wish to play an active role once their property once is occupied. The advantages of this are that you can build a relationship with your tenants. This, in theory, could earn both you and the property more respect, therefore damages to it will be minimal.
The flipside however is that being a landlord can be time consuming, requiring you to be available to your tenants at any time. For example, a pipe could burst at 2am and you will be the one who has to call a plumber to go and sort it out. You would also need to chase late payments and keep up to date with the legalities of renting out your investment. Buy to let landlords must also be aware that once their tenants have vacated the property, it is up to them to find new ones.
A hands off buy to let investing approach will require the full service of a management company. They will take full responsibility of everything from finding tenants, collecting rent payments and dealing with problems. They will also work with local tradesmen making sure all legal requirements plus health and safety codes are met. This is ideal for investors who own multiple properties or live far away. The downside is companies will charge around 10-15% of your monthly rental income for the privilege, plus maintenance costs. Always check the contract to find out whether or not these costs will include insurance for your property and the letting of it.
*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.