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Property investment is one of the largest industries in the UK, and with the current economy stabilising well, more people than ever are looking to increase their portfolio or invest in properties to develop. If you are considering a buy to let opportunity, then there are a few things to consider.
When choosing a property to rent out, it is important to consider the location first of all. Remember you are not purchasing a home for yourself, it is for a tenant, so keep in mind transport links, access to shops, doctors and so on. Location is something which attracts many prospective tenants over anything else, so as much as a small cottage in the country may be a bargain investment, it will be hard to rent out something so secluded.
It’s always worth thinking about the kind of tenant you would prefer to. If there is a teaching hospital or university nearby, a nursing student or junior doctor would be ideally looking for a home to rent nearby. Look at homes nearby and research the kind of people renting in that area. Is it a family area? Or predominantly single people or students?
Most investment properties will need a certain amount of developing which can obviously take both time and additional income, and whilst the property is empty, you are losing potential rental income. Therefore you need to have a contingency in place, particularly if you need to cover any mortgage payments during that time. An alternative however, is to purchase a buy to let property that is already let to existing tenants. This ensures instant income, but you will need to thoroughly check the tenants, the shorthold tenancy agreement currently in place as well as speak to the current owner and appoint a solicitor to check over everything. It can be incredibly difficult to remove bad tenants once you take over the property.
It may also be tempting to completely renovate the property, but if you are only looking to rent it out then providing it meets current building regulations and has the facilities needed for your tenants it may be counterproductive and unnecessary to spend more money on it. Obviously it is worth replacing things such as boilers, double glazing or roofing, but it isn’t necessary to overdo it. You can come to an arrangement with your tenants as to the policy for decorating but you can save a lot of money by keeping things basic and inexpensive. Only when you come to put your property on the market for sale will you need to consider investing in redevelopment to improve it further.
If you have the cash available, then you are in a much better position to invest, however many mortgage lenders offer buy to let mortgages, but their rates do vary. Do your research and ensure you are familiar with the terms of your mortgage. Buy to let properties are a good long term investment, and as long as you are aware of everything concerned, the return is often worth the hard work.
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