A buy-to-let is a typical long-term real estate investment. Simply put, a buy-to-let is a property purchased primarily to rent it out. In earlier days, this buy-to-let system of British origin was key for landlords to build their property business. Now, with the growth of rental real estate and demand for mortgages, you can think of a buy-to-let as a tricky, yet hefty investment. Here are 7 things to do before you make your move.
Dig Up Some Market Data
Buy-to-lets are a tricky part of the real estate market. Interest rates can vary, and sometimes be quite high, and mortgages can be worrisome as the years progress. The best way to go about investing in buy-to-let property is by talking to experienced buy-to-letters and gathering sufficient knowledge and information.
Work With Numbers
Do the math involved in the entire process of investing in a buy-to-let. You should ideally get a minimum valuation of the property done before buying it. You could also do some research on the rental rates in the locality to get a fair idea of the possible income flow from the property in the future. Then, approach the banks and negotiate appropriately. Keep in mind the calculation involving the parallel costs like mortgage arrangement fee, broker fee, stamp duty, legal fee, and survey fee.
Buy Lettable Instead Of Old
Think twice before buying an old house. They are not only difficult to rent out, but turn out to be of poor mortgage value. Always select a house that is lettable and matches your set of requirements.
Target Tenants
You must know what class of tenants you are planning to target with your buy-to-let property. It will give you a basic idea of what to expect from each party. For example, a student doesn't seek luxury, but clean and accessible houses. If you are looking at young working professionals, the house needs to be comfortable to live in and stocked with amenities. If you are targeting families, then you are letting out a home instead of just a house with brick and walls.
Think Long-Term
Since the mortgage for your buy-to-let is the property itself, you will be dependent on the tenant influx over the years to pay the loan. The banks are generally ruthless with their interest rates, so you need to think long-term and assure backup finances.
Keep Your House Well Equipped
You can demand a higher rent for your buy-to-let property by making initial investments to prepare the house for incoming tenants. So you must set aside an initial budget to purchase furniture and appliances to attract the right tenants.
Stay Ahead Of The Game With Letting Agencies
Many buy-to-letters employ letting agencies to manage the rentals and tenants. This comes at a cost. You need to be aware of any additional terms and costs that the agencies might insert into the agreement.
Hi I am Abishek Kumar, blog writer by profession with commonfloor.com. CommonFloor is India's leading online real estate platform that combines property search, apartment management and vendor management, thereby catering to consumers' complete residential needs. I provide tips and suggestions on property investment, real estate basics, and community living. For more property-related information, visithttp://www.commonfloor.com.
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