Since the introduction of TV programmes such as ‘Homes Under the Hammer’ and ‘Property Ladder’ the number of individuals who have ventured into the buy-to-let industry has boomed.
And for those who haven’t yet been tempted, is now the perfect time to take the plunge?
My research indicates that demand will out-strip supply for much of 2011/2012 and with a study by Paragon Mortgages reporting that for the majority of landlords yields are up and void periods are down, is now a fantastic time to become a landlord?
Add to this the number of young adults in ‘Generation Rent’ who believe that they are unlikely to ever buy their own home and becoming a landlord appears to be an increasingly attractive option. With saving interest rates so low and the stock markets in such a volatile state, investing in property seems to be a very sensible option, but sensible has to be the operative word. Like any other decision that involves a large amount of money, buying a property to let should be a carefully thought-out process.
Therefore, here are some of my top tips for first-time landlords:
• Load up on location knowledge – The statistics paint a rosy picture of the health of the overall rental market, but some areas of the country are doing better than others so consider location very carefully. Property expert Kate Faulkner advises first-time landlords to talk to local lettings agents about the area and the type of properties that are most popular with tenants.
• Explore the average rent for the area – Once you’ve chosen the locality in which you want to buy and decided what type of property it is you plan to purchase for a particular kind of tenant do your research to discover what the average rent is. Tenants are still looking to get the best deal so keep your rent levels competitive to avoid pricing yourself out of the market.
• Do your checks – Before you start thinking about keeping the tenant happy you need to be happy with the tenant. Make sure you (or your agent) carry out full references and credit checks and get a guarantor.
• What do tenants want? – If you really want to stay one step ahead of your competitors and avoid those dreaded void periods go the extra mile to find out what the tenants you are targeting really want. Common sense will tell you that if you have a three bed property marketed at young families then storage should be high on the list of essentials. Ask the local lettings agent what they are often asked for and talk to friends who may be renting to get their point of view.
• Do your research – First-time landlords must not underestimate the value of thorough research. It is especially important if you don’t plan to use a property management company as it will be your responsibility to deal with any issues that arise during the tenancy. For example, you will need to be able to call upon a tried and trusted plumber should anything happen to the pipes. Even if you decide to take a back seat and allow an agency to manage your property, researching property law will give you peace of mind should you be presented with a legal situation.
I would encourage anyone who is in a position to do so to consider purchasing a property to rent, despite the horror stories, if you buy the right property and use a good lettings agency, buy-to-let can be a relatively hassle-free investment strategy.
Article kindly provided by Christopher Watkin
Head of Franchise Recruitment for Belvoir Lettings