Property investment has become one of the leading trends for budding investors since the buy to let mortgage was introduced in 1997. Since then the sector has enjoyed considerable growth with the demand for rental properties steadily increasing year upon year. Currently in Britain, there are more than two million buy to let investors who are reaping the numerous rewards the rental sector has to offer.
Research suggests that the growth in buy to let is set to continue over the next year as current landlords look to add to their existing portfolio of properties. Furthermore, due to the introduction of pension reforms; allowing retirees to draw down lump sums from their pension pots earlier; it’s predicted that there could be a rise in retirees looking to enter the market and take advantage of their tax free sum. According to further statistics approximately 16 percent of pensioners will invest in buy to let properties as a method of attaining a consistent income long into their retirement.
Being a landlord often requires both time and dedication to ensure a good return on investment. Here are three things to think about before embarking on building a buy to let portfolio.
Do the maths. Whilst the allure of buy to let property cannot be denied, it is not an investment for those who wish to remain in the backseat. Investors must honestly evaluate whether they can balance the commitments the rental sector requires alongside their current lifestyle. Yes, buy to let can be a profitable business, but profit does not come without hard work if you want to maximise your yield.
Keep tenants happy. Investors who wish to become landlords will have to adopt and proactive and positive approach to attract good quality tenants. Landlords will also have to undertake the maintenance of the property, ensuring they are available in the event of unforeseen problems such as a broken boiler or plumbing issues. Resolving issues quickly as and when they arise will not only give you a happy tenant but one who respects the work you have put in to the property; increasing the likelihood that they will rent for longer. Many landlords prefer the hands off approach and will enlist the help of a third party letting agent. However, this does not come without a price and will depend on your budget.
Get your contracts in place. Unfortunately first time landlords will come to realise you cannot always secure the perfect tenant each time. Although this happens to only the small minority, it may come to the point where investors are required to evict the tenant from their property due to a string of contract breaches. If it comes to this, you will need a stringent contract in place. Furthermore, a letting agreement will help to protect your interests in many other circumstances, such as defaulted payments, damage to the property, and setting out who pays for what. Do not be tempted to take on a tenant without a written and signed agreement – even if they are a friend a family member.