How To Avoid A Buy To Let Nightmare
Investing in property whether it’s your first investment or your fifth can give you goose bumps at any time of year, but if you’re investing around Halloween time, you want to make sure those tingles are of excitement rather than fear!
Whilst the market is currently booming, it can be all too easy to get swept up by recent articles of new lockdown-prompted property trends amongst renters. To help you keep on the right path – hopefully to financial freedom, we’ve compiled five top tips to help you avoid the risk of being haunted by a bad investment situation:
- KILLER STRATEGY
The key to any successful investment is ensuring you have a killer strategy. For property, this means a combination of fundamental elements that theoretically add up to you finding a property that will deliver growth and provide a regular rental income (if this is a goal), allowing you to passively grow your wealth over time. These elements are: good location, connectivity, amenities, infrastructure and investment and of course tenant demand which, if you get the first four right, should come naturally.
- NIGHTMARE TENANTS
Unfortunately, there is no magic spell you can cast to only attract good tenants. But there are ‘tricks’ that will help you have the best chance of avoiding the bad ones. The first is to carry out all the relevant checks on your prospective tenant’s history and obtain references from previous tenancies. If you’re letting through an agent, choose a good one by checking reviews and speaking to other landlords about their experiences and make sure the agent is hot on carrying out all the necessary checks too. Finally, it’s equally as important to be a good and fair landlord, which will go a long way in helping you to retain a good tenant.
- PHANTOM VOIDS
One of the worst nightmares for a landlord is experiencing a long void period. If you committed to your killer strategy, you’ll have hopefully purchased a good quality property in a high demand area which should help to reduce the risk of a lengthy void period. Another way to help minimise void periods is to keep up to date with the market in that area – in terms of cost and also your offering. Consider the amenities that attract tenants and, importantly what your property could offer to ensure it’s ripe for the picking when it comes to tenant choice.
- SLASH YOUR RISK
In other words, make sure you have contents insurance, always put your tenant’s deposit into a deposit protection scheme and have a sizeable pot of cash set aside to cover unexpected maintenance costs. It’s also worth carrying out a regular review of your finances to make sure you aren’t paying out more than you need to and you’re taking advantage of any tax relief available to you. If you plan to pass on your property as inheritance, make sure you have a solid and tax efficient plan for this too.
- BEWARE OF THE BOGEY MAN
We’re not talking about the actual bogey man, but we are talking about developers or agents. If you’re buying a new-build or off-plan property, do your research on the developer behind it. Check their track record with regards to delivery and quality and do what you can to find out the levels of satisfaction from previous buyers and tenants if their past properties were also designed for rental. It’s also worth checking out their financials too, particularly if you’re buying off-plan, to make sure there’s little to no chance of them going bust halfway through the build.