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7 Top Tips For Buying A Rental Property
Buy to let mortgages are becoming increasingly popular. In these times of economic uncertainty, owning a rental property is a perfect investment. Not only does it provide you with a regular and reliable monthly income, it's a nest egg for you and your family's future.
So you've looked through the pros and cons, and decided that you want to become a landlord. Your next step is the most important one of all, finding the right property to buy. If you have the wrong property, you'll find it difficult to attract the right kind of tenants, and will have to lower the price of your rent. Here are 7 invaluable tips on how to buy the perfect rental property.
1) Seek advice from the experts
Would you decide to set up your own high street store without talking to other shop owners first? Renting a property is no different; it's a business. Talk to the people who are already doing it. You can learn from their mistakes and pick up on their best practices. Talk to landlords who you already know. It can also help to talk to a letting agent, such as Greens Lettings. We have dealt with experienced landlords and new landlords just like yourself.
2) Get professional financial advice
Buying another property is a big investment of your time and money. Go through your costings with your bank or financial adviser, and make sure that the initial costs won't put too much of a strain on your monthly budget. When you're taking a mortgage, don't stick with the same provider you always use. Shop around for the best current deal.
3) Set a limit, and stick to it
Have two figures in your head before committing to buying a property to rent. One should be the ideal figure that you'd like to pay, and the other should be your maximum figure. Realistically, you'll end up paying more than your ideal figure, but you should never pay more than your maximum. There will be lots of other costs, such as renovations, before your property is ready for tenants to move into. If you pay too much now, then you'll find yourself having to scrimp and save on everything else. This can impact on the amount of rent that you can charge. When you keep your upper limit in mind, you'll also be able to reduce the amount of properties that you look at. This saves you time, and helps keep you focused.
4) Decide what kind of tenant you want to attract
There are many kinds of tenants. Do you want to let to business people and commuters, students, young families, or even those on benefits? Each group has unique advantages and disadvantages. Deciding which kind of tenant is best for you can help you determine what kind of property to buy and where to buy it. A house near to a University, for example, will allow you to maximise your income by renting rooms individually, and there will be a plentiful supply of prospective tenants during term time. During the summer vacation, on the other hand, you may have difficulty in filling your rooms.
5) Find the perfect area
Once you've decided what kind of client you want to attract, you can find the perfect location. Put yourselves in their shoes. What would they want near to their home? You may want a property that's on a public transport route, one that's in the catchment area of a popular school, or one that's near to a large employer such as a hospital. Don't assume that because an area has a bad reputation, it really is a bad place to buy property. Many areas are shaking off their reputations and becoming more gentrified. Spend some time in the locale, and get to know the area.
6) Get a great price
Buying a new property and starting a new career as a landlord is very exciting, and you'll want to start it as soon as possible. Don't let that excitement tempt you into paying more than you have to; it's still a buyer's market. Never offer the full asking price, always haggle it down. You've no need to feel uncomfortable; the seller will be expecting you to do it and will have factored it into their asking price.
7) Be prepared to renovate property
Turning a property into a dream home can be a lot less expensive than buying one that's already perfect. You're going to be changing the look of the property before tenants move in anyway, so grab a bargain that needs a bit of work doing. You'll be surprised how much more cost-effective it can be.
Do you have more questions about buying property in London SE18? We also cover areas surrounding SE2, SE3, SE7, SE9, SE18, SE28, as well as SW19, UB7 and E16 to name a few. Contact us today by clicking here.
Greens Lettings is a property management company based in Shooters Hill, London. As your HMO expert in SE18, we continue to serve places in South East London such as SE2 (Abbey Wood), SE3 (Blackheath), SE7 (Charlton), SE9 (Eltham), SE10 (Greenwich South St), SE18 (Woolwich), SE23 (Lewisham) and SE28 (Thamesmead) — just to name a few. We are your local online letting agent specialising in HMO conversions and full management. We offer free consultation and free property valuation. Contact Greens Lettings here.