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Option Homes Ltd - News- Top Tips for New Buy-to-Let Investors – Part 2

Top Tips for New Buy-to-Let Investors – Part 2

Date Added 15/06/2016

Recently we posted Part 1 of our advice guide for new buy-to-let investors, which dealt with the initial issues that a new investor should be concerned with. In the previous blog article, we talked about the importance of researching not only the buy-to-let market but the other possible ventures that your money could go towards. Once you know buy-to-let is definitely what you want to do, you then need to identify an area that has potential before ensuring you have made all your calculations in advance of making any deals.

Now that the most practical advice is out of the way, let`s focus on three other areas which will also need the attention of anyone new to buy-to-let investment.

Recognise the Risks

During the ‘research` section in the previous article on this subject, we briefly mention that it`s important to know the risks of a buy-to-let venture. This means you must always weigh up your options with the negative and the positive in mind. You want to consider things such as the standard variable rate you may move to after a fixed rate period and the consequences of that rate should a remortgage become necessary but impossible. Also factor into your calculations the possibility of void periods (where your property sits empty while draining your resources). Make your calculations with the prospect of a two-month void period for every year, while also factoring in additional costs for the likes of boiler repair. Doing this will give you a little safety net should the worst come to the worst.

Understand Your Target Tenant`s Needs

You should have an idea of what your target tenant is while considering a property based on the area and size or type of the property. Once you know who your tenant type will be, you must identify with them in order to provide the kind of property they are looking for. A family, for example, will likely need child-friendly fittings, safety and quite a lot of space for their belongings. Young professionals will appreciate modern décor, while students will prefer a place that is comfortable but features little in the way of luxury in order to keep costs down.

Know What Kind of Landlord You Want to Be

This one is easy as it`s a simple case of deciding how hands-on you want to be. Do you want to collect the rent yourself and to be your tenants` first point of contact for any problems? If so, you will need to be the one who has the likes of plumbers and electricians on call ready to respond to any problems. Alternatively, you can let a reputable letting agent handle those issues for you, and they can also handle the acquisition of the rent payments from the tenants as well. Obviously you pay them a fee for their service, so it`ll need to be calculator time again to figure out if the money you pay them is worth the time you save and the reduced stress from not having to take care of everything yourself.

There will be one more blog to come in this series of advice articles for new buy-to-let investors, where we will focus on searching for the right mortgage, expanding your scope as well as keeping your ambitions realistic.
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