Buying A Property To Rent: What You Need To Know
Property has always been considered one of the safest investments that you can make. Everyone needs somewhere to live after all. However, the property market hasn’t exactly been steady over the last couple of years, and house prices have recently gone through the floor. Meanwhile, the cost of living has been going up and up and some people who may have thought they were close to buying their first home are instead coming around to the idea that they will be renting for a while longer yet.
That means that this is a good time to think about buying a property to rent. But there’s no such thing as a completely safe bet when it comes to property, so you’re going to have to make sure that you’ve taken every step possible to protect your investment. You’re also going to want to find the right people for your property without worrying that it’s going to fall apart while they’re living in it.
Research The Area Carefully
One of the most important things to consider when you’re buying a property to let is: will people actually want to live there. If the price seems suspiciously low, it might be because there’s something about the area that you don’t know about.
It’s always worth doing plenty of research on the surrounding neighbourhood before you buy a property. Try to explore the area in person if you can so you can get a sense of what it’s like at different times of the day. The neighbourhood and what it offers can play a big part in the kind of renters that you can target.
What Kind Of People Will Want To Live There?
Following on from the point above, it’s important to have an idea of your target audience before you agree to buy a property. For example, a central location will often appeal to a younger demographic whether that’s students or young professionals.
Most people will be looking for somewhere near easy transport links, whether the tube or the bus. Remember that London is actively discouraging people from driving these days so having a garage or parking spot may not always be the selling point that it should be. Properties outside of the city centre will generally be more appealing to families, but if that’s the case you should also look into whether there are schools nearby.
Understand Your Responsibilities
You’re going to be responsible for a lot more than you might realise if this is the first time buying a property to let. Remember that you need to ensure that the home is safe for people to live in, and that means that it’s up to you to ensure that everything is up to code. To start with, the most basic thing to factor in is that the property needs to be habitable.
You can get into serious legal trouble if you are found to be renting a property that is in a state of disrepair. You’re also legally required to guarantee the safety of the deposit that your tenants give you. There are deposit protection schemes that a lot of landlord use. You’re also going to have to make sure that the property is safe by having an electrical safety test conducted.
You’re accountable for the condition of any wiring, fuse boxes, switches, and sockets on the property, and you should be paying for a professional electrical inspection regularly. If you need a landlord’s electrical safety certificate, get in touch with the team at Hexo Electrical Testing. They offer a range of testing and safety services to make sure that your property meets the required standard.
Give Yourself A Budget
The chances are quite high that you’re going to have to do some repairs and upgrades if you’re going to convert a property into something that is going on the rental market. Generally speaking, you should be able to charge a higher rent for the more work that you’ve had done on the place.
People will see that bathrooms have been refurbished, that the kitchen has had new fittings, and so on. However, it can be tough to stop once you get started as any DIY veteran will tell you! It’s so important to set yourself a budget for any renovations that’ll need doing. You don’t want to end up out of pocket because you got carried away. It’s worth doing this before you start looking at properties. A fixer-upper is fine but only if you can afford to do the fixing!
Find A Letting Agent That You Can Work With
It’s quite rare for landlords to find their own tenants, and it’s generally better to go through an agency where possible. This will help to avoid any complicated situations that might put a dampener on friendships or relationships, for example. A good letting agent will tell you how much you’re probably going to be looking at in terms of rent based on the location and the property itself. But you can also talk to them about the kind of tenants that you want in the property.
For example, if you’ve spent a long time lovingly restoring a beautiful home, then you might want to consider telling the agent that you’re looking for a family or people who are working from home (which shouldn’t be too difficult these days given how many people are doing it).
Find Out What Tax And Insurance You Need
You are going to be looking at a fair amount of paperwork when you rent out a property. You’re still going to need to pay Stamp Duty even if you’re renting it out. As mentioned above, you’re going to have to ensure that you’re legally up to safety standards and that you protect the tenant’s deposit. You’ll also need to insure the property. A lot of landlords go with a policy that can be specialised for the type of property and the number of tenants that will be living there. Remember that while they are liable for their own property and will need their own contents insurance, you are responsible for damage to the property itself caused by accidents or extreme weather events like flooding. You may also need to consider contents insurance if you’re going to be letting the home as a furnished property.
Think About What Kind Of Landlord You Can Be
Some people are very happy being hands-on landlords. They are comfortable going around to attend to any issues and can be relied upon by their tenants to be there in person. However, it’s not always practical. If you live in another city, for example, you can’t pop over later in the day to take a look at a broken window. You need to think about finding tradespeople that you can trust if you’re going to be more of a remote landlord. Remember that you’re going to rely on them to not only be punctual but to give you an accurate description of the issue and to charge you appropriately. It’s worth taking the time to meet the tenant before or when they move in so you have a better idea of who you’re entrusting your property to.