There’s a lot of money to be made in renting out properties to tenants. If you’re thinking about becoming a buy to let landlord, follow these 4 steps.
- Do Your Research
Before anyone goes into the world of buy to let, they need to do their research. You need to know exactly what you’re getting yourself into. It’s not enough to just understand the benefits; you need to know the risks you’ll face too. You have to commit tens of thousands of pounds in order to get started, and you might not get that amount back.
That might not be a problem for some people, but for others, that’s a huge sum of money. You can’t hand over that amount of money lightly. You should research the market and spend your money very wisely if you want to avoid a disaster. Consider getting advice from a buy to let landlord with experience in the industry.
- Consider Finances Carefully
Finding success as a buy to let landlord is all about getting the figures right. If you don’t watch every penny and make sure that your finances are in order, things won’t go well for you as a landlord. You should plan your budget carefully and also plan how much you’ll spend on the renovations.
You also need to think about rental yield. This is the percentage of your overall spend that you get back in rent each week. For example, if you spend £200,000 on a property (including revocation costs), and you get £10,000 in the form of rent per year, you have a 5% rental yield. You don’t want to charge too much, or you’ll struggle to find a tenant.
- Buy a House with Potential
When you’re looking for a buy to let property to buy, you should focus on finding the home that has the most potential. A home has potential if it is located in a strong position and an area that is up and coming. It can also have potential if it has a lot of space in the home and a large garden.
Homes with potential don’t necessarily have to be in great condition though. If it shows potential, but is in poor condition and in need of renovation, you might be able to get it for a low price. This will allow you to get yourself a bargain and potentially make a lot of money from the property in the future.
- Find Your Target Tenant
Every landlord needs tenants if they’re going to make the money they want to. You can use a website that lists property rentals to find tenants. As long as you price the rent fairly, and the property is in good condition, you shouldn’t have a problem in trying to find a good, reliable tenant.
You should tailor the interior design of your property to make sure that you find the right tenant for you. If you’re renting out a property in the suburbs, you should make sure that the design of the home would appeal to a family. This is just a case of using your common sense and keeping your target tenants in mind.
These 4 simple steps will send you off on the road to success.