Investing in a buy-to-let property can be daunting for those who are venturing into this for the first time. Historically, those who pump money into these investments do make money, but this doesn't necessarily mean that mistakes haven't been made, which can result in a loss.
Anyone considering entering this market needs to conduct a fair amount of research before taking the plunge. Things such as where you want to invest and whether this will mean that you have to work through a rental agent need to be considered. On that note, those considering buying a property with the view to renting out it out to holidaymakers need to be cautious and understand what sort of market they are buying into.
Viewing seaside properties during peak season can give potential buyers the wrong impression. Sure, they may personally have had trouble finding a suitable rental property for their holiday, but does that mean that the holiday rental market in this area always as buoyant? Probably not.
Rental income is obviously very important and the rent charged varies significantly from area to area. For this reason, it's advisable to scour property web pages and local newspapers in order to get a general idea of what sort of rentals are charged in a particular neighbourhood.
The location of a property will often boost its potential rental income and as such, homes situated close to schools, shops and other amenities will often command a higher rent than those stuck out in the sticks.
The choice of neighbourhood is also vitally important and where you decide to buy can have a huge impact on the type of tenant you are able to attract. Although there are always exceptions, upmarket homes in good areas attract good, solid tenants. An average home in a well maintained suburb will also generally appeal to those who can be relied upon to pay their rent on time and to maintain the property to an acceptable standard. Run down properties in poorer neighbourhoods unfortunately often attract the wrong sort of tenant.
Crime happens everywhere – it is a countrywide problem - but some areas do appear to attract more criminal activity than others. Tenants won't pay a premium to live in a place where they feel unsafe and as such the tenant turnover may be higher than normal in an area plagued by high levels of crime.
Rates and taxes are another aspect that any potential buy-to-let investor should investigate thoroughly before investing in a particular area. Bond repayments, particularly on recently bought homes, tend to be high and more often than not the rental charged will just about cover this cost. In other words, any other expenses are going to be for the landlord’s account and need to be taken into consideration before a buying decision is taken.
No one should ever rush into a buy-to-let investment without doing the necessary homework. Those who take their time and get to know as much as possible about an area before making a decision will probably come up smiling, while those who buy something on the spur of the moment may end up regretting an extremely expensive mistake.