Last Updated on Mar 11, 2020 by James W
One of your very first steps in becoming a successful landlord is the actual purchase of your first buy to let property. It may prove difficult finding the property that ticks all the right boxes and comes up to your expectations, but the choice may be absolutely fundamental and critical to the eventual success of your business venture.
There are a number of ways of finding such investment property to buy and there are a number of considerations you may want to take into account when deciding whether the property you have found is going to be suitable for buying to let.
Finding a property
Buying an investment property may be quite similar to buying a home you intend to live in as an owner occupier – in other words, finding the premises through the services of an estate agent. It may be an obvious place to start, but for very good reason. These are the people who have a wide, and expert inside knowledge of the property market in any particular area, so it seems sensible to tap into it.
However good that experience and expertise, even estate agents are unable to buck the market. The simple laws of supply and demand suggest that there are many aspiring buy to let investors chasing just a few suitable properties. There may not be enough of them to go around. You may need to keep the agents in your area – and as many of them as possible – constantly on their toes so that you do not miss an opportunity.
What may count for a great deal, therefore, is the relationship you have built with the leading estate agents in your chosen area. These are relationships that may be worth investing a fair amount of your time and effort in.
One of the more alarming recent developments – and one that undermines the ease of striking up a friendly working relationship – is the possibility of estate agents charging not only the seller but you the buyer a fee on property purchases (according to a report in the Guardian newspaper).
Even if you have never attended an auction sale you might still have the sense of their being a thrilling way of doing business and a market in which you may be able to pick up a bargain.
Both of those outcomes may be true, but you might want to approach an auction with a healthy degree of caution. As suggested by Cover4LetProperty there is a good deal of homework you may need to do before the day of the sale.
Rather than simply turning up at the auction house, for example, you might aim to pick up the catalogue and visit likely properties yourself, before conducting the searches you might conduct before making any purchase.
When you do pitch up at the auction sale, you need to remember that you may need proof of your having sufficient funds to complete any purchase before you are allowed to participate. This will typically need to be paid within 28 days of your making a successful bid – not forgetting a (non-refundable) 10% deposit payable on the day of the auction.
Property investors’ clubs
Just as the name suggests, these are clubs for like-minded landlords, drawn together by the attraction of pooling their knowledge, experience and expertise.
If you are new to the business, therefore, membership of such a club may give you a feel for some of the more likely sources of property available, together with a knowledge of some of the more common pitfalls that lie in wait for the aspiring landlord.
Inevitably, the internet is not only used by established estate agents but is also being developed by other property agents looking to usurp their traditional hold on this aspect of the market.
Indeed, a report in the Independent newspaper went so far as to suggest that the activities of exclusively online agents may spell the death toll of traditional estate agents.
What type of property?
In many respects, knowing where to look for investment property may be a whole lot easier than deciding what actually makes for a good rental property.
There are a number of factors you may wish to take into consideration:
- the simple fact is that the success of your buy to let business depends entirely on your being able to attract tenants in return for suitable rents;
- in other words, is the area you choose going to be popular with tenants;
- is it close to the town centre and served by frequent public transport links;
- is the property in an attractive area or one that appears down at heel;
- it might be helpful to ask yourself whether the property you intend to buy is worth renting from the tenant’s point of view;
- is the rent you need to charge likely to be considered a fair and viable proposition by the very individuals from whom you intend to be generating your income;
- in other words, you are likely to be trying to understand your tenant market;
- keep in mind, for instance, that different types of tenant may be more likely attracted to different types of property;
- young and single professionals, for example, may express a preference for a newer property and one that does not involve the chore of maintaining a garden; and
- bear in mind, too, that female tenants may have different priorities than males – security, a well-lit area of town, with more passers-by; etc.
Finding the right property
Some of the principal keys to becoming a successful investor in property, therefore include knowing where you might find suitable property and what is likely to make property suitable – and profitable – for letting.
There are no simple and easy answers to either of these questions, but the research and groundwork you put in at this early stage of your career as a landlord are likely to pay dividends in the future. Get it right and you are likely soon to be running a successful and remunerative business – get it wrong and the hefty investment you are likely to have made in the premises may represent a substantial loss.