What you need to know if you want to buy-to-rent a property

Investing in buy-to-rent properties can provide a good opportunity and be a sound financial decision. However, it is important not to begin this venture blindly. There are a number of things to consider and do before deciding whether buy-to-rent is the right decision, especially for first-time investors.

What you need to know if you want to buy-to-rent a property

Research the market

Look at every angle before investing in a property. Think about whether you can afford to keep your money tied up, as property is a long-term investment. Additionally, you need to take into consideration what happens if the market collapses and the prices fall. Make sure you have all the facts beforehand and speak with other investors about their experiences.

Research the area

It is essential not to restrict yourself to your immediate neighbourhood. Think about your future tenants and where they will want to live. Consider buying near schools, amenities and local transport. Since the property will not be your home, be sure to exclude your personal preferences. Single people and students have different needs than families.

Negotiate the price

Buy-to-rent investors start from an advantageous position, as they can negotiate the price of the property. After you find the perfect property, don't be tempted to pay too much. Moreover, don't let the sales agent or owner see how much you are enjoying the property. This excitement can turn against you once you get to the negotiation stage. Stay polite and ask about previous problems with the property such as wall cracks, plumbing or wiring. Not only are these things important to know prior to purchasing a property, but they also help the seller see that you aren't about to make a decision based solely on your feelings for the home.

Check your finances

Ensure that you can afford the property before committing to an investment. Research the local property prices and rental rates in the chosen area. If the figures do not add up, there is no point in taking the process any further. If you need to take a mortgage out on the property, ensure that the rent covers 125 per cent of the mortgage. New property investors are often required to pay higher arrangement fees and deposits.

Establish your involvement

Most homeowners hire a rental agency to manage their property and deal with unexpected problems. If you decide to hire an agent, make sure you know exactly what fees will apply and what services are offered in exchange. Remember that some agents will try to charge extra fees in case your property needs maintenance. Since you already pay a monthly fee, don't accept this practice. An agent will arrange the viewing, deal with repairs and advertising and interface with the tenants.

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