Property can be like a game of snakes and ladders. When you’re new to the lettings business hopefully you will climb a few ladders, but you can be particularly vulnerable to slithering down the occasional snake. Here are some of our top tips for avoiding the pitfalls.
It is important to have a very clear purchase strategy from the outset. Location is the key. You may be tempted to buy cheaper properties that are far away from your home, but you’ll need to think through the implications of remote management and the prospects for capital growth. As a first time landlord you could start simple and buy closer to home, where you already have knowledge of the area and local amenities such as transport links. Put together a strategy that considers location, the type of property and how it will be managed. Look at the trends and the type of market you would like to target to get the best returns within that geographical area. The higher the demand for your type of property the quicker it will be to rent it out.
As a general guide, if you have £50,000 to invest, you could buy a property worth £160,000. Out of £50,000 cash you can pay £40,000 as a 25% deposit and utilise the remaining £10,000 for fees, furniture if letting furnished, and getting the property ready. Always seek a strong rental yield (rent calculated over a year), which should be at least 5-6% of the property value. If you are a cash buyer consider splitting your cash into smaller chunks and getting mortgages as this is more cost effective. Visit NLA Mortgages (discounted for Full Members) to access the best mortgage deals in the market.