Choosing a buy to let property
Choosing the right property is vital to a successful investment
Choosing a buy-to-let property is an important decision that could make the difference for your investment – here’s our guide to finding the right one.
A buy-to-let property is a property you’re looking to buy with the intention of letting it out to tenants.
Buying a property you intend to live in means you only have to consider your own tastes and what works for you.
However if you’re buying with the intention of renting the property out, you’ll want to give yourself the best chance of getting reliable tenants in. This means considering factors that might not be important to you, or making decisions based on a wider appeal rather than things you specifically want.
For example, you might not be fussed about public transport links if you have one or two vehicles, but it could be a high priority for your future tenants. Likewise you might want an open-plan home for yourself, but it might not be the ideal layout for the tenants you’re hoping to attract.
It can be useful to think in broad terms, but catering to everyone is next to impossible – which is why you should also consider the kind of tenants you want. This way you can look for a property that provides everything you need – and giving yourself the best chance of eventually making a profit on your investment.
When you’re looking at potential properties to buy and let, you should consider the following:
Before you decide on a property and get the buying process started, remember:
1. Don’t rely on personal preferences
You might want a house with an in-built Jacuzzi or a hundred meter garden, but these properties might not be best suited to someone looking to rent. Save your dream house for you, and look for something that has a wider appeal to give yourself the best chance at letting the property out.
2. Consider your tenants
Instead you should consider the type of tenant you want to let out to. For example, you may have the options of:
3. Set a budget
Property can be a rewarding investment, but like any investment there is always a degree of risk. It’s always a good idea to set a budget, and it should factor in:
This can help you keep better control of your finances during the period of buying and setting up the property before you start getting a regular rental income.
4. Mortgage repayments
When you set your rental price, keep your mortgage payments in mind. Many lenders will want you to set your rent at 125-150% of the mortgage repayment amount, as well as wanting a 25% deposit from you when you buy the property.
5. Consider your responsibilities and obligations
As a landlord, you’ll have several responsibilities to your property and tenants. These will include:
Read more about what these involve with our guide to landlord responsibilities.
6. Haggle for price
Before you put in an offer for a property, it’s always worth trying to haggle for a lower price. The seller may want to speed the process along so they may go along with it, and the less you spend on the property, the more money you’ll have to renovate or remodel.
7. Resale value
While letting the property out can be useful in securing a regular income, you might also be tempted to think about reselling to make a profit. In this case it might be a thing to look out for when you look at properties.
8. Landlord insurance
Being a landlord can be rewarding financially, but there are always going to be costs involved. Some of them will be out of your hands, such as damage caused by tenants or a loss of rent, which is why having landlord’s insurance can be so valuable.
It can protect you against the costs of accidental or malicious damage, if you have no tenants, if your tenants can’t pay their rent, and various other risks.
It’s easier to find a better deal for landlord insurance if you compare with MoneySuperMarket through our preferred partner, Simply Business. All you need to do is tell us a little about yourself, your property, and your tenants, and we’ll give you a list of quotes tailored to you.
You’ll be able to compare the deals by factors including excess, premium cost, and any additional extras included in the policy. Once you’ve found the one you want, just click through to the provider to finalise your purchase.
However, as with any insurance product you should remember the cheapest policy isn’t always the best. It’s better to find a quote that offers the right level of cover you need for the best price available – this way you won’t be over- or under-insured.
Choosing the right property is vital to a successful investment
Our landlord insurance guide has tips to find the best cover for you and your properties
MoneySuperMarket provides a go to guide for dealing with a nuisance tenant
MoneySuperMarket provides a breakdown of the changes to the buy-to-let-stamp-duty
Our guide highlights some of the most important responsibilities that being a landlord presents
If you’re thinking about using a property management company to help you let your property, read our guide
MoneySuperMarket provides a breakdown of the changes to the buy-to-let tax relief. See how the changes affect you