Despite the turmoil we have experienced recently, bricks and mortar still remains a safe investment and buy to let can definitely work for you if you plan and do your homework properly. Your property investment is double faceted – income (rental yield), which is your cash flow, and capital growth which is the value of your property over time. You may not always have both working together but long-term growth/performance is what you are really looking for.
Here’s 5 steps to consider when purchasing a property for investment:
- Step 1: Make it Work for you
- Step 2: Invest in the right location
- Step 3: Find good quality tenants by using the right letting agency
- Step 4: Price right and ensure your rental is in optimal condition
- Step 5: Once you have found good tenants, look after them
Step 1: Make it Work for you
First and foremost, make sure that your investment will work for your individual circumstances. Before buying, speak to an experienced rental agent in the area who can advise you of what rental returns you can expect and what type of properties are moving the fastest. It is not always possible to cover your bond and other expenses with the rent so ensure that you have enough other income to cover any shortfall.
Step 2: Invest in the right location
The area you choose is very important – a smaller property in a good area is better than a bigger one in a ‘not so good’ area. It is also advisable to do some research on up-and-coming areas and get in in the early stages to maximise your investment.
Step 3: Find good quality tenants by using the right letting agency
Use the knowledge and experience of an established and reputable letting agency to find good quality tenants. Your prospective tenants need to be carefully and thoroughly vetted, and you want to be secure in the knowledge that your chosen agency won’t take any short cuts during this process. If a bad tenant slips through the net, you could end up with a squatting tenant who isn’t paying rent.
Step 4: Price right and ensure your rental is in optimal condition
Ensure that your property is priced correctly. You cannot base your asking rental on what you are paying back on your bond – it must be based on the reality of what the demand is. If you are not getting any interest, then it means that you are not priced correctly. Choosing a well established rental agency to aid with this is advisable. You need to ensure that your property stands out above the rest and in order to achieve this, you need to have the rental set correctly and you need to ensure it is presentable with little to no defects. The better the condition of your property, the better standard of tenant you will attract.
Step 5: Once you have found good tenants, look after them
Once you have a good tenant in your property who is paying the rent in full and on time, ensure that you keep that tenant by being a pro-active landlord who deals with any maintenance issues efficiently. As maintenance can be time consuming, consider appointing a property management agency to ensure the best service to your tenant. When it comes to rental increases, keep them to a minimum as you want to retain a good paying tenant and there are costs associated to finding a new tenant which would easily outweigh your potential increase over the next 12 months.
Wakefields Property Management has been finding and managing quality tenants for our clients’ properties successfully since 1939. Chat to us, we’re here to help.