Investing in your first buy to let property is obviously a massive decision and there could be more things to consider than you realise before you take the plunge.
Here are top 10 tips for first time landlords from Newcastle lettings and estate agency Walton Robinson;
1. Decide what kind of landlord you want to be
It's a difficult choice when you've never been a landlord before but you need to work out if you have the time to be a hands-on landlord (and be the one they call at 4 in the morning when the boiler breaks) or if you want to give up some of your rent and pay a letting or property management agent to do all the hard work for you. Many agencies now also offer a pick 'n' mix option where you can select only the services you need such as rent collection, deposit registration, inspections or inventories.
2. Think about the type of tenants you are aiming for
There are plenty of options when it comes to deciding on the type of tenants you want to aim your property at; are you looking for the high rental returns that come with a large group of students or potentially longer term lets from professional tenants or a family.
3. Look at different types of properties
Choosing your first rental property depends on the type of landlord you want to be and the type of tenants you want to attract. If you want a purpose built apartment there are extra charges such as ground rent and concierge fees to consider. Speak to any other landlords you know, research online and speak to a letting agent who has experience in the area you're looking in.
4. Learn the legislation & get some advice!
There is a lot you need to know about before you take the first step in becoming a landlord; gas and fire legislation, landlord insurance and health and safety are just some of the things you will need to research before you let your property out so you don't meet problems in future. You also need to check rental history for the property; legislation in many areas means you can't just buy any 5 bedroom house and decide to let it out. It's definitely necessary to get some expert advice before you buy any investment property.
5. Where to Invest
University cities such as Newcastle are very popular rental locations and can give excellent returns of up to 10% in some areas- higher than the national average. Not only do university cities give the opportunity to tap into the student rental market but also the many young professionals who chose to stay in the city post-graduation. If you are investing outside of your local area, find an agent you can trust to help source and take care of managing the property.
6. Research the Market
You need to be realistic about the rental yields you can achieve- it all depends on the type of property, the standard of decor and the location. Looking at similar properties on property portals such as Rightmove and Zoopla can be a great indicator of asking rents.
7. Do you need a mortgage or are you a cash buyer?
If you are not a cash buyer you will need a special buy to let mortgage and the ability to provide a larger deposit than on a normal home purchase. There is a wide range of buy to let mortgage products on the market so make sure you do your research and speak to an independent advisor to find the best one for you.
8. Refurbishment Project or Up-and-Running Investment?
There are two options when purchasing a buy to let property; you can buy somewhere which has existing tenants and includes all the furniture, fixtures and fittings. This option means you don't need to spend extra money on the property and you have an up-and-running investment. Alternatively you could buy a property to redecorate or refurbish and hopefully enjoy an increase in the rental income.
9. Budget Buffer
You may have budgeted for purchasing the property and any legal or agent's fees but it's also necessary to prepare for the possibility of emergency maintenance such as a new boiler and for the chance your property does not let straight away and you end up with void periods. Having a buffer of at least two or three months rent is recommended, just in case!
10. Finding the Right Tenants
Once you've bought your first property it's time to find the tenants. Advertising your property yourself is always an option but using an agent can be a lot more successful, as well as much easier. A good agent should have the benefits of a full marketing strategy including their website, press advertising, social media platforms, property portal advertising such as Zoopla and Rightmove, an up to date database of potential tenants and an office benefiting from good passing footfall so your property can be seen by a much larger number of people. An agent will also be able to carry out credit checks or ensure tenants have a guarantor to give you more security that the rent will be paid on time.