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Top 6 Buy to Let Investment Tips

Top 6 Buy to Let Investment Tips

Real estate boom & bust is the story of every town. This is because investors get profits when property prices rise and sustain losses when property prices fall. But real estate sector has an investment option that is crash proof. This is the buy to let investment. The landlords get monthly rents even when real estate prices are crashing. But like every other investment type, you should learn about buy to let investment. This blog describes the top 6 buy to let investment tips for the beginners.

Review your budget

The first thing to consider as a buy to let investor is the budget. As a buyer you have two buying options. Firstly you can buy home on cash payment. Second option is to buy home with a mortgage. Buying with cash has the advantage as you will start getting profit on the investment from month one. If buying with a mortgage, your monthly repayment should not be more than 35% of your income. Otherwise you will have to compromise on other expenses. Thoroughly review your budget to select the top investing option as it will impact the returns.

Select the top location

Location is the most important factor that has huge impact on real estate investing. Location not only matters for buying or selling but also for renting or letting. Prime location homes have high demand with greater rental yield as compared to the homes with bad locations. This is because most renters want to live in the areas that have all modern amenities. Therefore for buy to let investment, select an area that is near to the central business district, shopping centers, schools, hospitals, parks and transportation links.

Buy the right size home

Home size is also very important for buy to let investment. You should know that renters always prefer to rent normal size apartments or houses that have 2-3 bedrooms. It’s hard to find tenants for very large or small size houses due to low demand. As a buy to let investor you should know that while renting people also save the deposits to buy own homes. So renters will not rent a large size home with high rent. Therefore size of a home should also be considered for buy to let investment.

Screen the prospective tenants

The disputes of landlords and tenants are very common. The main reason of dispute is that tenants don’t pay rents on time. To avoid the disputes it is very important to select a tenant who is responsible and pays the rent on time. Students do pay regularly but their stay is normally shorter. But people who have no proper jobs don’t pay rents on time. Mostly pensioners and government employees always pay rents on time. Therefore screen your prospective tenants to check their rent affordability.

Keep some cash for hard times

Buy to let investment is very profitable but there are pitfalls too. Sometimes homes remain empty for many months. You should have the enough cash to pay the mortgage on time. Another consideration is the regular maintenance or repair costs. You should have enough cash to repair your home in case it is damaged. Keeping the home in good condition is very important as no one wants to rent a home that has bad condition. Therefore always keep some cash for the hard times.

Know your duties

Like every business buy to let investment also requires the satisfaction of the tenants as it will build your reputation. As a buy to let investor you have many duties. The first responsibility is to maintain the property. The second responsibility is to provide peaceful stay to the tenant without any interference. Thirdly you have to pay the tenants for any repair they do on your behalf. Fourthly you have to give at least 1 months’ notice to the tenant before eviction.

Tips for Landlords to Screen the prospective Tenants

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