A buy to let mortgage is taken out when the investor wishes to purchase property specifically to rent out. The offer is an attractive method of investment, especially considering how low interest rates are currently. But they are not entirely without risk. To help you maximise your profit, here are some tips you should follow:
Do your market research When looking for investment opportunities, you should always look for the method that will provide you with the largest return. This method will not always be buy to let. Look into the risks and benefits of investing in other areas and find out which is most suitable for you.
Invest in the correct area
Acquiring property in the wrong area can lead to a lower return. The right area isn’t necessarily the place where house prices are highest. Look to invest in up and coming areas where people actually want to live. Small towns with good transport links situated outside cities are often popular with commuters, making houses in such areas highly desirable.
Decide who your target is
The type of tenant you attract will depend on the type of property you invest in and where it is located. If you choose an area where there are a lot of university students, your property should be competitively priced and comfortably furnished. If you are investing in an area dominated by business professionals, your property should be furnished more luxuriously. Keep in mind that family homes are generally the safest type of property in terms of damage and other issues.
Don’t just buy in your local area
Don’t make the mistake of only looking at investing in properties near your home. Although they will be more convenient, they may not offer the best return. Investing in an area which is further afield will allow you to maximise profit. This will easily offset the cost of traveling to and from the property.
Consider refurbishing a property
Purchasing and then renovating a property can allow you to increase profits by an even larger margin due to the purchase price being lower.
Haggle over everything
The fact that you are purchasing property to rent, as opposed to live in, is that you do not need to be part of a chain. This gives you a bargaining chip when negotiating price. Start with low offers and ensure that you do not overpay. Overpaying will eat into your profits later on.
Decide if you want a letting agent
When you have purchased a property, the next step is finding tenants. You can either do this yourself, or enlist the help of a letting agent. For a fee, they will find tenants and deal with any problems which may arise. If you do decide to go with an agent, make sure to shop around and get the best deal
Do you have any experience with buy to let mortgages? If so, leave us a comment below and let us know if you have any more tips to add to this list.