Six tips when buying your first buy-to-let property

Before commencing your initial buy-to-let venture, every landlord should follow these six essential steps, which encompass everything from selecting the optimal location to perfecting the interior decor.

With 4.61 million households occupied by private renters in England in 2022, there is a considerable profit potential for individuals who approach it strategically and make wise decisions, making buy-to-let landlordship a profitable opportunity.

Here are six tips to think about when buying your first buy-to-let property.

Find a property in the right location

The age-old saying, “Location, location, location,” holds true when aiming to generate a healthy income through your first buy-to-let property. It is essential to keep an eye out for opportunities to acquire a property in a promising “up and coming” area at a reasonable purchase price. This strategy can potentially lead to increased rental yields as time progresses.

Additionally, it is crucial to consider the location’s suitability for attracting the desired tenants. If your property is situated in a mismatched location for your target tenants, you might encounter difficulties in renting it out, which could result in financial losses. For instance, if you intend to attract student tenants, acquiring a property in an area popular among students would be advantageous.

Weigh up your overheads vs returns

Given the currently high buy-to-let mortgage interest rates, it becomes crucial to assess whether the projected rental income will sufficiently cover the mortgage repayments and generate a surplus.
Moreover, it is essential to account for additional factors such as expenses related to third parties like letting agencies responsible for property management, legal fees, renovation costs, and stamp duty. These overheads must be carefully analysed to make informed decisions.

For any first-time buy-to-let property investor, achieving accurate calculations of overheads versus returns is vital for the venture’s success. Ensuring a proper balance between expenses and potential income is key to running a profitable business.

Check your mortgage lender’s conditions

The majority of first-time buy-to-let landlords will likely require a mortgage, unless they have the fortunate option to make an upfront cash payment. Nevertheless, it is crucial to thoroughly review your mortgage lender’s terms and conditions, and also determine whether you are eligible for a buy-to-let mortgage. Selecting the ideal Buy-to-Let mortgage can be a challenging task. However, at The Residential Mortgage Hub, our expert advisers will handle all the necessary work on your behalf, and help you understand your options and affordability.

Research your responsibilities as a landlord

Before embarking on your journey as a first-time landlord, it is crucial to have a comprehensive understanding of all your responsibilities. The legislation governing landlord obligations towards tenants varies slightly across England, Wales, Scotland, and Northern Ireland.

Key responsibilities that landlords must fulfil towards their tenants include:

1. Taking care of repairs and maintenance, which encompasses the property’s structure and exterior, to ensure it remains in good condition for tenants.
2. Allowing tenants to have the ‘peaceful enjoyment’ of the property while they rent it – this means asking tenants’ permission at least 24 hours before performing property inspections.
3. Fulfilling any commitments stated in the tenancy agreement that are the landlord’s responsibility.
4. Safeguarding tenants’ deposits by placing them in a government-approved scheme.
5. Ensuring the property adheres to electrical, fire safety, and carbon monoxide regulations to ensure the safety of the occupants.
6. Providing an Energy Performance Certificate to inform tenants about the property’s energy efficiency.

Being aware of these responsibilities is vital for maintaining a positive landlord-tenant relationship and adhering to the applicable legal requirements.

Take out specialist landlord insurance

When venturing into the world of property rental, various unforeseen circumstances can arise. Therefore, when acquiring your initial buy-to-let property, it is important to safeguard yourself against a wide array of possibilities by investing in a comprehensive and specialised landlord insurance policy.

Think about the sort of tenants you want to attract

Consider the specific demographic of tenants you wish to accommodate in your new rental property. Whether you’re targeting students, families, professionals, couples, or the elderly, this decision will impact the preparations you make, such as the interior decor and furnishings, tailored to suit their lifestyle.

For instance, if you aim to attract students, providing comfortable sofas and chairs for relaxation, ample storage, and essential appliances like a dishwasher and washing machine can be beneficial. In general, demonstrate to your target audience of tenants that you have meticulously considered their preferences and needs while staying mindful of your budget constraints.

As discussed earlier, the type of tenants you intend to attract will also shape your choice of location for your initial buy-to-let investment. Different areas and neighbourhoods hold varying appeal for diverse tenant demographics.

Find a Buy-to-Let mortgage with The Residential Mortgage Hub

If you are searching for Buy-to-Let mortgage, The Residential Mortgage Hub is here to turn your property investment aspirations into reality. Whether you are a first-time landlord or are a portfolio landlord, we specialise in simplifying the mortgage application process. Contact our team today on 01634 96811 or book your appointment online.