Your success with buying to let depends on choosing the right property. It may sound obvious but many aspiring landlords don’t take the time to think about what property will best suit their buy-to-let plans. The 3 most important things to consider are who you want to rent to, the location of the property and the realistic rental income you can expect to get from it.
Your potential tenants
Who are your ideal tenants? Students? Families? Young professionals? They all have different requirements for a property, and different considerations for its location. If you have the wrong property or location for your target tenants, you could struggle to rent it out successfully. And every day the property is empty, you’re losing income.
How are you going to manage your property? If you’re doing it yourself, then ideally you’ll need the property to be close by. But if you’re planning on using a letting agent then you can look further afield to areas that might have a higher demand for rental property.
You might consider talking to some agents too, as they’ll know what’s in demand and could even help you spot a gap in the market. Just make sure you speak to more than one to get a rounded view of the local market.
Your rental income
You’ll need to set a rate of rent that at least covers your costs. Consider how much you’ll spend on buy-to-let mortgage payments and other costs, like insurance, repairs and agent’s fees. It’s really important to work out what you’ll need to spend each year – and estimate the effect of any periods when the property is vacant. Seeing what other landlords and agents are charging for various property types could be helpful, too.
Your rental income will also determine how much you can borrow through a buy-to-let mortgage, making it all the more important that you have a good understanding of what this will be.