For many people, buying property with a view to letting it as a landlord is an attractive investment. But it is one that is not to be made lightly: buy-to-let investment is of course a very different proposition to simply buying your own home to live in. When you become a landlord you are essentially taking on a small business, and this naturally carries important legal responsibilities. That’s why it’s important to consider carefully whether or not it is the right step for you. If you decide that you can cope with the commitment, becoming a landlord can be a very profitable move.
How To Buy
If you’re looking to buy a residential property then you can use cash of your own or alternatively you can take out a buy-to-let mortgage with a cash deposit. If you go for the latter option then you must keep in mind that mortgages come with risks attached. If you have to sell the property for a loss, then the price at sale may not necessarily cover what you owe on the mortgage, meaning you would need to make up the difference. Similarly if your tenants vacate the property and leave you with no rent coming in then you’ll still have to make your mortgage repayments.
Making A Profit
When you have bought your rental property, there are two main ways you can make a profit on it: rental yield and capital growth. The former is what is left once your tenants’ rent has had maintenance and running costs like repairs and agency fees deducted from it. When considering rental yield, it’s important to bear in mind that the amount of rent you can charge your tenants varies according to different factors associated with wider market trends that are outside of your control. The latter is the profit you stand to make if you sell the property for more than you paid for it. However, if house prices fall then the value of your property is likely to drop with it, meaning you may not be able to sell it for as much as you would have liked. There is of course plenty you can do to boost the attractiveness of your property to prospective tenants, and in so doing increase your income. Kitting out the interiors with new décor and furniture from a firm like Fortune Woods will encourage renters to pay more for it. So while buying to let does come with its challenges, it also offers many great ways to make a profit.