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Advice to first-time landlords entering the world of buy-to-let in the UK.

Buying to let tips

Since the late 1990s, when the buy-to-let boom really began to take off, it's become almost the investment vehicle of choice for millions of British people.

This is because Britain's population has grown hugely and continues to do so and of course the availability of housing cannot keep pace with demand. Add to this relatively easily available cheap credit and you can see why buy-to-let has become so big.

But the first-time investor must tread carefully - it's vital to thoroughly do your research before buying. Below are just a few tips that may help the prospective buy-to-letter.

image of modern blocks of flats overlooking The Thames

Where and what to buy?

Essentially, there are two things you will want to achieve with a rental property: capital gain and yield. It depends on your own circumstances and choice, which is the more important.

agent handing keys to tenantIf you are looking for high yield then ex-local authority properties are usually a good bet - but they usually offer poor capital gains. If it's capital gain rather than yield then generally you need to buy high quality property in up-market areas.

There's a strange guide I always follow, and that is the more unpleasant the area the higher the yield - though it doesn't always apply!

Remember also that in order to get tenants you need to ensure that your rental property is well situated for transport links and shopping/entertainment facilities.

It's actually a good idea to buy locally if that is feasible as it will enable you to let and service the property yourself if you wish.

What type of property?

image of modern terraced houses If you are able to easily manage the property your self then a freehold 2/3 bed house can be a good idea because you will not have to pay service charges that will probably be out of your control. However, if you cannot easily manage the property for any reason then a flat with a management company is a good solution. But always check carefully the length of the remaining lease and the service charges etc.

Buying at auctions

The way to buying a property at the lowest possible price can be to buy at auction. The drawbacks are that you must have the cash availableimage of gavel coming down - 10% is required on the day and the balance after 28 days from the auction. Also, you should get the legal pack carefully checked out and a basic survey doen. If you fail to secure the property then of course the costs of the legal and survey work will be wasted.

Preparing to let your property

The two golden rules when making alterations, refurbishing or simply decorating property in order to rent it, are as follows:

1) Know your market...
If you're looking for young professionals as tenants you will want to ensure that the decor is both neutral but at the same time stylish. As far as furnishing it's best to be flexible. montage of rental interiors, paint roller and colour guideIf your market is students then it's best to provide basic furnishing such as beds, a sofa, a coffee table and perhaps white goods.

2) Don't get too personal...
Remember that an investment flat or house is not where YOU live. Do not overspend, obtaining wonderful furnishings that you personally like, because it will probably all be wasted! Just decorate and furnish up to the level that your market expects.

Use a letting agent or do it yourself?
If you are local to your investment property and you are confident to show the property yourself, then I would strongly advise doing it yourself. Use an online agent to put your ad on the main portals like Rightmove and always take out Rent Guarantee & Legal Expenses insurance. This is because there is a slightly increased risk of dodgy tenants seeking out landlords advertising direct. Consequently it is VITAL to reference as thoroughly as letting agents do.

However, if you're not local to the property then you will need to use an agent. Do ensure they are members of ARLA and I would definitely avoid 'Full Service' agreements and go for Let Only at about 7% - 8% of the annual rent.

Click to view Landlord Guide on Amazon In conclusion
Obviously the above is just a very few tips on profiting from buying to let. There are many sources of information across the internet and in bookstores and I would urge a novice landlord to tread carefully. I have produced a Kindle Buy To Let guide myself, aimed specifically at first-time landlords, available as a download from Amazon.

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