There will be a point in your life where you need to start thinking about investments. Even though putting your savings in a bank account is a good financial strategy to help you create an emergency safety net, you will always have to put a portion of your money into investments in order to make your cash work hard for you.
I’m sure you are already aware of the various types of investments, including the likes of stocks, shares, and funds. You might even have some of these already.
But have you ever considered investing in property? There are various ways you can make some extra cash out of property.
Simply buying your own home is a good start as it should increase in value by the time you come to sell it. There are a few other options, though, if you want to make more money sooner, one of which is buying-to-let. This is when you buy a property and rent it out to a tenant.
The main benefit of renting out a property is that you will receive the rent every month, providing you with a regular second income. But in order to do so, here’s what you needs to do first:
Always Do Your Research
Firstly, it’s super important that you do lots of research into buy-to-let properties before you take the plunge and actually buy one. After all, there is no guarantee that this will be the best investment option for you. So, be sure to start researching the ins and outs of owning and managing a buy-to-let property. Reading this blog post will certainly be a very good start for you!
It’s also necessary to research the local property market where you will be investing. Every region’s property market will be different, and some will be performing better for investors than others. If your chosen local property market isn’t doing so well currently, it might be worth waiting a year or two until you purchase your buy-to-let property.
Buy In A Good Neighborhood
It will always pay off to buy a property in a good neighborhood. This will be an area that has a very low crime rate and is seen as being attractive to people in good jobs. That way, you will know that the people who apply to rent out your property will very likely be respectable tenants who won’t cause you too many issues at all. Not only that, but the best areas are always going to be attractive to tenants so you should never struggle to fill your house or apartment.
Buy Good Quality To Ask For Higher Rents
One other tip is to always try to buy the best possible property that you can afford with your budget. Again, this will ensure that you get some responsible tenants who you won’t have to worry about living in your property. After all, you don’t want to risk renting it out to someone who is going to completely trash the place in their first week of living there! So, if you buy a fairly pricey property, then you can charge a higher rent. Not only will this benefit you financially, but it will also reduce the chances of getting any riff raff as tenants.
Consider How Much To Charge
You need to charge a monthly rent that is going to make you a profit but won’t be too high that it will put potential tenants off the house or apartment. One way to figure out the best monthly rent is to take a look at the house or penthouse floor plan as this should show you what the total size of the property is. This is one factor that you can use to decide how much to charge.
Obviously, the larger the property, the more you can get for its monthly rent. Don’t forget to also take a look at what similar properties in the neighborhood are being rented out for as well. This will give you an idea of the average asking price. Try not to price your property much higher than this, as possible tenants will simply look at cheaper options in the area.
Shop Around For Your Mortgage
There’s a good chance that you will need to take out a mortgage to be able to afford your buy-to-let property. Don’t just go with the first mortgage provider that you see. Make sure you take your time to shop around in order to find out who will offer you the best deal. Since you are buying a property to rent out, there could be certain restrictive factors when it comes to applying for a mortgage, so you might find it useful to enlist the help of a mortgage advisor.
Consider Using A Rental Association
Managing a buy-to-rent property can actually be very hard work. If you don’t fancy having to do all the household maintenance and repairs yourself, then it could be worth renting the property out through a rental association. This association will find and vet tenants for you, as well as collect their rent and deal with any property maintenance.
Once you hire this kind of association, you won’t need to deal with the property again until the tenants move out. This is a great option for those who don’t live close to their rental property. Bear in mind, though, that the rental association will take a small percentage of the monthly rent as their fee.
Take Out Plenty Of Insurance
Make sure that you have a lot of insurance on your buy-to-let property. It’s necessary to take out the usual building insurance to cover any damage that might happen to it. Whether you pay for content insurance for the property is up to you – some landlords leave that up to their tenants, as it isn’t a legal requirement for landlords to take it out. You might also want to take out landlord insurance as this will help you financially in the event of any missed rent payments.
Do you think a buy-to-let property is a good investment for you?