Consider these 5 things before you invest in a buy-to-let property

For many of us, investing in property seems to be the more accessible and appealing investment option – and an attractive alternative to paying into a pension scheme. Doesn’t it?

We’ll just buy a house and rent it out, and all will be smooth sailing as we reap the benefits….

But actually, it’s not that simple. Investing in a buy-to-let should be considered a medium to long term investment. There are a lot of things to consider when thinking about making the choice to invest, whether you’re a first timer or expanding your portfolio.

Luckily, we’ve been advising landlords for years, and so we’ve gathered up our knowledge and put it into a little package for you.

5 things you need to think about:

1. Where you’re going to invest, and who will manage it

Location, Location, Location. One of the first things you’re going to want to consider when you’re looking to buy to let, is where you’re going to buy. Nearby your own home? In a town or city local to you, or further out? You’ll need to think carefully about the area you choose and how well a rental property will perform there – looking at who you’re looking to appeal to (students, couples, families etc).

Have you decided whether you’re going to go solo and manage the property yourself, or bring on a letting agent? There are pros and cons to both. If you’d like to have a less active role and have a letting agent manage your property, going further afield location wise shouldn’t be a problem (as you won’t be needed as much!). Using an ARLA (Association of Residential Letting Agents) member as your letting agent is a smart choice if you do go down this route, as they’re bonded, hold Professional Indemnity Insure to required standards and are kept up to date with the latest legal and regulatory requirements. They can also advise you on local market demands, so it’s worth getting in touch regardless.

2. What it is you’re investing in

You’re going to want to make sure you buy a property that isn’t going to rack up a big bill in work and cause you problems down the line. It seems like an obvious point to make, but many landlords get stuck buying properties with potential maintenance problems – i.e. large gardens that will require landscaping, or homes that aren’t standard brick and mortar, and may need specialist work. attention. Instead, pick a trusted low maintenance property, and pay attention to the furnishings inside – providing value inside is going to pay off by attracting the best tenants. Pay particular attention to the kitchen and bathroom!

3. Are you ready for the responsibilities?

If you’re going to become a landlord, you can’t ignore the responsibilities that come with it. You’ll need to ensure that the property meets safety standards and is kept in a good condition. This includes alarms, fire safety, gas safety and water quality. All electrical installations will need to be safe for use, and the relevant engineers and electricians will need to be called out for inspections if required. You’ll also be required that your tenant’s deposit is held in a deposit protection scheme in line with government legislation – failing to do so could hit you hard in fines.

4. Know what tax you’re likely to pay

We’ve written a whole separate article on this consideration alone. Since changes have been made recently to mortgage interest payments, it’s crucial to gain an understanding of the impact tax will have on your investment, whether you’re thinking about investing for the first time, or thinking about adding to your portfolio. Please do have a read of our Tax issues for Landlords article which explains in more detail – and please do come to us for advice to avoid a tax trap!

5. Do you have access to the cash to buy?

Chances are, probably not outright – unless you’ve been saving for a long time or you’re using an inheritance. This means you’re going to need to look into obtaining a buy-to-let mortgage. But you may have noticed in the news over the last few years that banks have tightened their reigns with regards to who they lend to, making it harder for new landlords to access the finance they need. We’ve gone into detail about the best ways to maximise success in raising finance in our article – Isn’t it hard to raise finance to invest in a buy to let property?

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