Purchasing a Buy to Let: Top 10 Things to Consider

Are You Starting Your Property Search?

Starting your search for a buy-to-let property can often be daunting. Especially if you are a first-time buyer. First and foremost, you should get a full understanding of your finances and your affordability before commencing your search. It is always helpful to have an initial conversation with a mortgage broker to discuss your financial situation and get an agreement in principle. You can then confidently start your property search within a defined price bracket.

Once you understand your affordability you can decide on a particular region you want to purchase in and the type of property you want to buy. We recommend beginning your search on property portals such as Rightmove, Zoopla and On the Market. Use this time to get an understanding of certain buy-to-let markets and what you will be able to purchase.

Once you have completed some of your own research, understand your preferences and have some familiarity with preferred property markets. You should then speak to a specialist investment agent. They will provide invaluable insight into the buy-to-let industry and guide you through potential investment opportunities.

2 | Quality

When choosing a buy-to-let property to purchase it is important that you are confident with its quality. This is crucial for two reasons in particular. Firstly, a higher quality property will secure a tenant more easily as people prefer a good standard of rental property. This is especially true as homeownership continues to decline and people are renting for longer.

Secondly, a higher-quality property will cost less to maintain. A buy-to-let property is an investment and any maintenance will impact the returns it can achieve. Purchasing a low-cost property might initially seem like a good investment, but it may end up costing more in repairs and maintenance leading to a loss of income.

4 | Rental Prices

Along with the purchase price you will need a good understanding of the rental prices achievable in the area. Much like with the purchase price you should undertake due diligence when determining a property’s rental value. When investing in a buy-to-let property the associated costs must be covered by the rental payments to ensure profitability.

Ensure your comparison is based upon similar quality and sized properties in the same area. You should also pay attention to how long the properties have been on the rental market before drawing definitive conclusions. After all, void periods will eat into profits enormously.

6 | Job Market

When choosing where to invest you should strongly consider the employment rates of the area, the calibre of employers that are located there, and salaries that are achievable. The strength of a job market in any given town or city has enormous consequences on its overall prosperity. It also has tremendous effects on an area’s property market.

A strong employment market with high salaries helps drive up rental prices as more young professionals move to the area. Furthermore, a high employment rate reduces the chances of tenants going into arrears. Mitigating this risk can provide needed investor confidence.

8 | Local Amenities

We live in a world where convenience is held in the highest regard. People like to have shops, gyms, public transport, restaurants etc all within a short distance from where they live. It is important that you consider the level of amenities available in the local area as this will have a direct impact on your tenant demand.

A buy-to-let property within striking distance of supermarkets, gyms, restaurants and train stations will have huge tenant demand. It is important, however, that this does not come at a cost of privacy for the tenant. Also, on-site amenities are becoming increasingly popular, with tenants willing to pay more for the convenience.

10 | Property Management

Finally, you will need to carefully consider how you will manage your buy-to-let property. Should you wish to manage it yourself it would be wise to look for properties within a reasonable distance of your home. A buy-to-let property on the other side of the country and managed by yourself can turn into a nightmare.

At CityRise we recommend using professional lettings and management services and avoiding doing it yourself. By selecting a reputable agent, you will achieve higher rents, and lower void periods and your tenants will be looked after 24/7.