Spend the time as well as the money when choosing property as a rental investment.

Get the location right, make sure it's convenient for transport links, make sure it's the right size and style for your local market...and pay the right price!

What is the RIGHT rental property?

Although it may seem obvious, the right rental property is one you pay the right price for. Once you have worked out how much you think you can purchase it for, add any necessary refurbishment costs. Then check how much you can reasonably let it out for, deduct any service charges, ground rent etc, agent's commission if you don't want to let it out yourself and look for at least a 5% net yield at the very minimum. If you can't buy it at a price that will give you at least that yield just walk away. AS capital values fall you should in fact be able to achieve over 6%.

Location, Location, Location

With apologies to Phil Spencer and Kirsty Allsop, when it comes to rental investment property, location is one of the most important features. Look for places that are no more than 15 minutes walk from a train station or at least within easy access of good road links. Also look for good shopping and entertainment facilities within fairly easy reach.

Identify your market

There are great houses and flats in lovely areas close to transport links, shops etc but they still aren't good rental investments. This is because they are probably located in areas which are primarily attractive to homeowners and those settling down. You will rarely get a good rental return in such areas simply because there just isn't the demand.

Look for properties well located for universities, hospital and places where a lot of people tend to be employed on short-term contract such as TV studios. These are usually ideal places in which to invest just because of the level of demand for rental property. Generally speaking, city centres, inner city areas and to a lesser extent, busy suburbs are better than countryside and rural areas.

Get the property right for your market

Once you have identified your market, look for properties that will appeal to that market. For example, if your primary market is students, look for two and three bedroom terraced properties. Many two up two down Edwardian and Victorian properties can easily be converted into three bedroomed properties by converting the front reception. If you feel your market is affluent young professionals, luxury one and two bed apartments can work well.

Decorate it for your market not for yourself!

Unless you are appealing to the high end luxury market, just furnish the property stylishly but as cheaply as possible. IKEA, B&Q etc have really good looking basic kitchens and bathrooms – you will not get much more rent buy putting in a £15000.00 kitchen or a £12000.00 bathroom. So don't get carried away.

To use an agent or not to use an agent...

...That is the question. If you're new to letting it's probably a good idea to let your property, as there are a number of pitfalls they will be able to help you avoid. Also, rogue tenants tend to in the main avoid agents.

Let it yourself with Landlord Rent Guarantee Insurance

Letting Agents are expensive though, anything up to 15% of your annual rent though usually around 10% depending on the service package you select.

A great alternative is to let it yourself and simply buy Landlord Rent Guarantee and Legal Expenses Insurance – for a very modest annual premium your rent up to £2500.00 per month is guaranteed and you are also covered for the cost of legal advice to recoup your rent, other costs and if necessary, evict the tenants.

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