If you’re considering purchasing a buy-to-rent investment and becoming a first-time landlord, there are a few things you should consider. Here are our top five pointers to think about before taking the plunge.
1. Location, location, location.
It’s vital that you carefully consider the location of your rental property before investing. The location will influence the desirability of your property, and that in turn will impact the amount of rent you can charge. Consider your target market – is the area mainly home to young families? If so, consider the proximity of the rental property to good local schools. If it’s a student area, try to find a rental investment that’s well connected to the main campus buildings. Also, are there good train and bus stops nearby as well as local amenities like shops and banks?
Location can also affect the amount you pay for landlord insurance. If you live in a high crime area for example, you’ll probably be charged more for your insurance policy.
2. Know your stuff.
Make sure you understand the processes and legal obligations involved in renting out your property. You will need to draw up a tenancy agreement, which is a legally binding contract between you and your tenant. You’ll also need to read about your tax obligations and understand how security deposits are handled.
Landlord insurance is considered a must-have purchase for most buy-to-rent owners. If your property is being rented to paying tenants, then it’s highly likely that a standard house insurance policy will not be sufficient.
4. Maintenance and upkeep
You’ll need to carry out regular maintenance checks at the property to see that it meets all health and safety regulations. If you fail to sufficiently maintain the rental, you could be at risk of a negligence claim. Also, if the property isn’t in good condition it may fail to provide you with an adequate rental income. Think about how you’ll maintain the property – will you require assistance from a qualified tradesman or do you have the skills to carry out work yourself?
5. Finding tenants
You’ll need to promote your property effectively to ensure it doesn’t sit empty. For a fee, you could employ a property management company to handle the entire tenant finding process for you. If you’re doing it yourself, make sure you carefully vet potential tenants and take the necessary references and deposits. Most people look to the web to find rentals, so make sure to feature your property on all the major property websites.