Partner Article

Factors to consider when choosing a buy-to-let

Making a profit on a buy-to-let in today’s competitive rental market is by no means a done deal. You need to offer the right property, in the right location, at the right price, and there are a number of factors to consider when deciding what and where to buy.

Here we’ve highlighted some of the most important factors to consider before making this key investment:

Location

When it comes to a buy-to-let, it really is a matter of ‘location, location, location’. Who is your tenant? To a student or low-income worker who may not own a car, properties with good public transport links may be preferable. Try to select a road with other rental properties on it too, as this indicates the area is attractive to tenants. On the other hand, if you will be letting to the executive market, access to good schools and amenities such as bars and restaurants is important. It is always a good idea to buy in an area you know well, so you can draw on your insider knowledge of these factors.

Style of property

When buying a property, have a word with local estate agents and see what is in demand. It could be that family homes are popular in your chosen area, so look for properties with at least 3 bedrooms and a sizeable garden. If student lettings dominate the market, choose a property which can be transformed into as many bedrooms as possible, as students will tend to favour affordable rents over luxuries such as gardens and big living spaces.

Property condition

Unless you are looking to renovate your property in order to increase its value, ensure that your chosen property is structurally sound. Spend money on the best survey you can afford to check that there aren’t any hidden problems that will eat up any profits you make. It is also a good idea to take out landlord insurance to cover any unexpected problems that might crop up.

Finances

Do your sums. Work out how much rental income you are likely to get from your property, and take away the cost of any mortgage, insurance and other potential costs to ensure that you are likely to turn a profit – which after all, is the whole point of having a buy-to-let in the first place!

This was posted in Bdaily's Members' News section by Peter Rivers .