If you’re thinking about buying a rental property then there are four things you should keep in mind, whether you’re a seasoned pro or new to the buy-to-let game.
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Location is a really important consideration when it comes to picking a rental property to buy, both for you and your tenants.
Firstly, you need to think about how much of a hands-on landlord you want to be. If you want to be able to inspect your property regularly, for example, it’s going to be a lot easier if you live close by. If you’re less concerned about that, you can look further afield.
Location will also play a part in determining your rental yield. Average rents in London, for example, are more than twice as much as average rents in Wales - but rent is rising faster in Wales than the rest of the UK, and in London it’s actually dropping.
Then you need to think about the location of the property you’re considering in relation to what’s around it. Having amenities like shops and transport links close by will appeal to a broad range of tenants, but if you’re looking to appeal to a certain type of tenant you might want to take other factors into account.
If you can’t get tenants into your property then you’re going to be losing out on rental income, and if your property doesn’t appeal to tenants then it’s going to be a lot harder to let.
One of the things you should think about is what kind of tenant you’re trying to appeal to. If you want students, then proximity to the local university is important. If you’re after families, then you’ll want to keep your eye out for properties near the local schools.
The type of property you purchase is also a factor here. A three bedroom house with a garden is more likely to appeal to a family than a young professional. However, the rules are slightly different in London, where sharers are much more common. Remember, though, if you want to rent to sharers in London you may need an HMO licence before you can let your property.
You should also think about the decor of the property, including fixtures and fittings. If things are looking a little shabby, it might be worth updating before you start trying to let your property. Read our quick guide to renovating your property for an idea of where to get started.
People become landlords for different reasons. Maybe you’re looking for a passion project that you can do up before letting, or maybe you want to be able to hit the ground running. The amount of effort you want to put into the property will be a factor in what kind of property you buy.
Whenever you’re buying a property you should have it surveyed so that you know if there are any faults with the property you need to be aware of. There are some problems you can fix up before tenants move in, while others, such as subsidence, may cause more long-term difficulties.
As well as the property itself, take a look at the surrounding area. Is it in a place that often experiences floods? Is it on a busy but narrow road where it could be damaged by passing vehicles? Make sure you take into account everything that could require work on your part, whether it’s before you let the property or while it’s tenanted, before you decide to purchase.
Finally, you need to think about what value a property can give you. For the most part, the value comes from the rent you can get, so take a look at similar properties in similar areas to see how much they are being let for.
However, a property is also an investment, so thinking about the future will also help you maximise the value you can get out of it. For example, if you buy in an area that’s currently being developed, you might not be able to charge tenants as much as you might in other areas, but after the development is completed you could well be able to put rent up.
What do you think is the most important consideration when buying a rental property? Let us know in the comments.