Buy-to-let is booming and, for savvy investors, it can be an obvious place to put your money if you want to save for the future. However, becoming a landlord doesn't come without its pitfalls, so here are a few tips to help first-timers avoid some of the common mistakes:
1. Buy property that appeals to those wanting to rent. Flats and two-bedroomed homes appeal to a lot of potential tenants, especially those who struggle to buy their own home. Stay away from large houses which can be expensive to rent, and often put people off.
2. Don't go for that stunning period cottage. You may want it yourself, but remember you aren't going to be living there and a new property will mean less maintenance over the years.
3. Don't just buy a property in your local area. Look at areas where people want to live for a number of different reasons - good schools, commutability, good transport or also where students may want to be based.
4. Location, location, location. As with any property, you don't want to be going to run-down areas as this can attract poor-quality tenants, but at the same time you don't want somewhere too affluent.
5. The type of mortgage you get is important. Whether it's a buy-to-let or a repayment is down to you, but if you get a rental income which covers your mortgage then you are doing OK. Think about getting a fixed rate if you are worried about rising interest rates and go to more than one broker.
6. Consider using a letting agency. Shop around and find the best deal as there are plenty of letting agencies out there. Don't worry about trying to haggle with them, especially if you have a few properties - you should be able to get their fee down to around seven per cent.
7. Beware of the letting agency 'add ons'. When it comes to doing maintenance on your property letting agencies can charge an 'admin fee' - but you don't have to put up with that. You already pay a monthly fee and this should cover any work they have to do.
8. It's not what you know, it's who you know. If you know anyone who rents out property have a chat with them, find out what they have learned from doing it - they may know a good plumber or electrician, or can possibly refer you to an efficient letting agency.
9. Do the maths. Before you make a decision check you can afford to cover any eventualities such as replacing the boiler. Also, filling in the tax return forms isn't a piece of cake - think about employing an accountant.
10. Make sure you are doing the right thing - remember you are putting your money into something that may fall in price over the next few years. The property market is unpredictable, but then so are stocks and shares.
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