Buy-to-let property is not as hot as it used to be. Many investors who decided to purchase this type of property during the previous high economic period are now struggling because of rising rates. However, many investors are still tempted to buy now because of improved mortgage deals, lower housing prices, as well as rising rent costs. A large deposit is required and things are a little more difficult to handle now versus previous years.
The story on buy-to-let investing?
Existing investors should now benefit since most lenders have offered lower rates. This is usually when the investor relies on the standard variable rate that the lender has offered which is usually a discounted base rate as low as 0.5%. Since many cheap buy-to-let mortgages do not have the standard SVR but instead the bank rate, many investors have benefitted.
1. Do your research
For those who are trying buy-to-let for the first time, consider what you know and do not know about the market. It is important to know the benefits as well as the risks.
2. Select a prospecting area
When selecting a prospecting area, this does not mean where to find the cheapest or expensive property. It rather means an area where people enjoy living for several different reasons.
3. Crunch some numbers
Before stepping out to take a look at some properties, take some time to sit and write down the cost of various properties that you are interested in. Consider the rent that you will be likely to earn from the property.
4. Consider who you will rent to
Don’t consider whether you would live in the property but rather consider who your target tenant will likely be such as college students or company employees. They will often be looking for cheap buy to let mortgages, but don’t undercut yourself in the deal, and play it smart – even if you find those perfect tenants.
5. Don’t set your expectations too high
We have all heard stories about instant millionaires from cheap buy-to-let mortgages and how big their portfolios are. The good times when house prices went into the double digits are gone. The experts recommend investing for income and not short-term growth on your capital.
6. Consider looking into the future
Many buy-to-let investors try to locate properties close to where they live. Remember that your local area is not always the best area to invest in.
7. Negotiate prices
Buy-to-let investors have the same opportunity as first-time buyers have when it comes to haggling for a discount.
8. Beware of pitfalls
Always investigate the negative impacts as well as the positive benefits before making any investment.