Top 10 Buy to Let Tips

Below we have compiled our top 10 buy to let tips that we feel should help you in your buy to let endeavours. These top 10 buy to let tips will provide you with a list of things to consider when taking on a buy to let property - we hope that you find them useful and help you to avoid any unwanted surprises! 

1. Research the location
Always research an area thoroughly before choosing to invest. The local amenities, transport links, schools, etc. will all have an effect on the value and rental demand for your property. Research also recent comparable sales and rental achievements and beware of discounts being offered by developers looking to offload new developments. Remember that any supposed discount offering is being put to you by someone who stands to benefit from such an exercise and therefore will be ignored by all lenders in the current market. Off-plan buying has its place and its time but not just now.

2. Define the tenant profile
Think about who your tenant is likely to be (family, professional, student, etc.) and present the property accordingly. Don’t produce a five star property where the local rental market only requires student accommodation. Not only will you have spent too much money on the final product but you are unlikely to get a higher rental return. Having said this, mod cons such as Wi-Fi can help secure the right tenant. If you think the property might be classed as an HMO (House in Multiple Occupation), make sure the property has a licence to operate from the local council. You will not be able to secure finance on the property without it.

3. Talk to a specialist broker
Some buy to let mortgages are not available on the high street so to get a complete picture of the finance options available, consider using the services of an independent specialist broker that has access to the whole market. They will have the experience needed to match your borrowing requirements with the most suitable products available. Also, their business volumes and longstanding relationships with lenders often afford their clients preferential processing treatment on mortgage applications.

Remember, unlike home-owner mortgages, buy to let mortgages are not regulated by the FSA, so make sure that you use a broker that is a member of the National Association of Commercial Finance Brokers.

Residential property investment is not a get rich quick scheme. It is a medium to long term investment strategy and a good broker will help you to consider all the potential costs in order to forecast your return on investment. Costs can include:

• Lender arrangement fee
• Mortgage application booking fee
• Broker fee
• Property valuation fee
• Legal fees
• Mortgage payments
• Letting agent fee
• Tenant reference check fee
• Landlord insurance
• Rent insurance
• Property maintenance
• Tenant void periods

In the current market average annual yields of between six and ten per cent can be achieved depending on the type of property.

4. Decide whether to self-manage or use a letting agent
You need to way up the pros and cons of managing the property yourself or paying a letting agent to manage it for you. If managing yourself you need to ensure you have the right skills or at least the right contacts and support to ensure that things get done quickly and efficiently. The majority of landlords who manage and maintain properties themselves invest in their local vicinity and are generally on-call 24/7. If you are investing outside of your area, using the services of a letting agent may be a better option but do make sure you understand all the fees involved (finding tenants, tenant reference checks, inventories, lease renewals, etc.) Unlike estate agents, letting agents are not regulated, so do make sure you use one that is signed up to ARLA.

5. Check out your tenant
In the current climate it is more important than ever to undertake credit reference checks on new tenants. Simply hoping that a prospective tenant will pay rent on time doesn’t make sense. Tenant referencing checks can cost less than £10 per person. You should also ask for an employer’s reference.

6. Protect your tenant's deposit
If you take a deposit from a tenant on an assured shorthold tenancy agreement, the law in England and Wales says that you must protect it with a government-authorised tenancy deposit protection scheme within 14 days of receiving it. Failure to protect the deposit could result in you having to compensate the tenant with up to three times the amount of the deposit and you may not be able regain possession of the property.

7. Maintain your property
It’s all too easy to hold back from maintenance when cash flow is tight but how your property looks can mean the difference between tenants renewing or signing that first lease. When buying a flat ensure that there are no outstanding maintenance issues and unpaid service charges. Many owner occupiers don’t challenge landlords’ service and maintenance bills. Use your knowledge of property (and costs) to ensure that these are fair, reasonable and actually get done.

8. Get proper landlord insurance
Landlord insurance is designed specifically for rental properties and covers circumstances not covered by normal household insurance. In addition to the usual perils that are covered by standard buildings and contents policies, specialist cover for buy to let properties includes protection from the sort of damage or losses that can arise if you are unfortunate enough to end up with problem tenants. If you own multiple properties you could save money using an insurer that will provide cover for all properties on a single policy.

9. Keep accurate records
It is important to keep accurate records for each rental property you own. A simple spread sheet will do but if you have lots of properties it might be worth using specialist software or employing the services of a bookkeeper. Don’t lose out on tax breaks by being tardy on your paperwork.

10. Join an association and get accreditation
It can be a lonely business being a landlord, particularly if you are managing your rental property. You can get support and training from joining a landlord trade body such as the RLA. Even better, why not get accredited status? It could mean the difference between a prospective tenant choosing your property over another. Landlord accreditation schemes aim to help landlords operate a successful business and safe-guard tenant interests. To gain accreditation, contact your local council for details.