With mortgage rates due to fall to record lows following the Bank of England’s decision to cut its base rate to 0.25%, an increasing number of people are looking to buy property purely for making money instead of living in it.
But before buying investment property, there are a few golden rules to consider.
If you already own your own home, you will have a good idea of what it costs to buy and maintain a property. When making financial decisions, you will know that your financial situation is to be considered prior to making any moves.
When buying a second home it is common for mortgage providers to require the purchaser to make a deposit of 30% of the home value.
Taxes have also increased in recent years; the price you will pay will no doubt be higher due to property price increases. Besides the regular costs, you must also budget for repairs, general maintenance. When you rent property out to others, it is wise to set aside an amount of money for repairs.
Owning a property and being the landlord often takes more time than expected. Once you have made the purchase you will need to dedicate time to making the home presentable/marketable to potential tenants. Then you will dedicate time to finding and vetting your new tenant.
Once the tenant has moved in, you will need to be on hand to address any concerns they have along with making sure the property is maintained at all times.
Once the tenant vacates the property you will 9 times out of 10 need to spare some time to complete small repairs that could include painting or carpeting.
When tenants rent a property, they have less incentive to keep the home in perfect condition.
More often than not you will have access to the deposit which is in place to cover any damages that may occur. But time is valuable and it is time that you will need to spare in order to prepare the property for the next tenant.
Buy-to-let is a fantastic investment method and is a great source of income for many investors. With interest rates at new lows, there has never been a better time to give it a go.