I’ve just purchased my first buy-to-let property. What’s next?

Property is a great investment. As long as your rent covers the mortgage on your buy-to-let property, you could make a healthy return on your investment. If you have paid for the property in cash, you are making a clear profit each month minus any insurance or maintenance fees. If you have purchased the property to rent, there is a lot to consider. If this is your first investment property, here are a few points to think about as you begin this exciting journey.

What are your goals?

It’s your decision on what you want to do with the property to achieve your goals. Do you want to get monthly income from the property? Will it be a holiday rental? Or do you want to renovate and improve it to resell? Think about how this property will help you reach your short and long-term goals.

Getting the most from your buy-to-let property

By obtaining your first investment property, you have made the decision to boost your monthly income as well as investing your money for long-term gain. With the property values ​​being so high right now, you will have to spend more money on the property upfront, but this means you can charge more rent too. But first, you need someone to rent it.

Who are your ideal tenants?

The ideal tenant pays their rent on time. But income aside, you need to think about who your ideal tenants are and how you are going to attract them.

  • Charge the right price for your property type, condition, and location
  • Market your property well
  • Communicate with potential tenants and reply to them quickly
  • Don’t undervalue or overvalue your property
  • Keep the property clean, presentable and in good working order
  • Treat each tenant fairly and equally
  • Perform background checks for your safety and peace of mind
  • Verify their income. This can be done via payslips or by contacting their employer.

Where your property is located will also affect the tenants you attract. For example, if you want to rent to students it needs to be close to a University with good transport links, or if you would prefer a family think about where the nearest schools are and research local crimes rates.

Tip: Right to Rent legislation means that landlords can check that tenants can legally rent their residential property. You can find out more here.

Hire a letting agent

Like many things in a post-covid world, finding tenants can be done virtually. If you don’t have the time to be the main point of contact for your tenants or do not want to handle the tenant side of things yourself, you can hire a letting agent. For a monthly fee (usually a percentage of your rent), they will speed up the process of getting a tenant. They will also deal with any issues directly so you can enjoy the benefits of rental income without the added commitment. You need to choose a reputable agent in your local area with good reviews and a positive reputation.

What are my obligations as a landlord?

It’s obvious that you are required to keep the home in a safe condition and ensure utilities and appliances are in good working order. But becoming a landlord is much more than keeping a home in good condition. You have legal obligations, regulations, and guidelines that you need to adhere to.

Here are some of the main points you should know:

  • Ensure the property is safe and free from health hazards
  • Fit and test smoke alarms
  • Provide an EPC for the property
  • Keep up to date documentation and contracts
  • Pay taxes on the income of the property
  • Give 24 hours’ notice of any repairs or maintenance work

For your peace of mind, you should protect yourself with landlord insurance.

Insurance

There are always risks attached to buy to let properties and insurance will help protect you.

As soon as your property is rented, you need landlord insurance. It will protect you from situations that standard home insurance will not cover. This includes loss of rent, contract disputes, legal expenses, squatter issues, and accidental damage. Direct Line has 5-star Defaqto rated landlord insurance, but there are other providers out there.

We hope this brief overview has helped you gain a better understanding of how to move forward with your buy to let property. We appreciate that all this information can be overwhelming, especially if it’s your first property. Get in touch with us if you need any further guidance or clarity. Prosperity Wealth is here to support you on your buy-to-let adventure.

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