Buy to Let Property


Buy to let property can make for a profitable investment with potential for long term capital gains and ongoing income. However it is no ordinary investment.

The process of investing in cash, bonds and collective investment funds is easy and involves no day-to-day hassle to you. Investing in property however can involve day-to-day management responsibilities if you wish to manage the property yourself although you can employ a managing agent to do this for you.

In reality we would suggest you consider buying investment property if you are an expert on the subject or intend to be in it for the long term.

If you are thinking of using property to fund your retirement income then take a look at our Pension v ISA v Property comparison, which will give you a better idea of which option might be right for you.  

Although property prices will rise and fall the basics of buying and owning investment property never change.

A few golden rules to remember:
  • Consider how the property will be managed - be sure that a landlord is what you want to be and that you have the time to do it, if not, then make sure the cost of the managing agents does not cut in to your share of the rent too much, and certainly not to the extent that it makes the mortgage tricky to afford.
 
  • Consider your location and property carefully – where are people renting, is it a popular area for people to rent, are local amenities near by, how much rent can you get, does the house need work?
 
  • Consider your finances carefully - what would the mortgage payments be, will you even get a mortgage, do you have enough of a deposit to put down, what if interest rates rise, if the tenants move out and the property is empty can you afford the mortgage, what would the rental yield be (annual rent from property after costs divided by the property value) compared to other income producing assets (remember to consider the potential increase in the value of the property here)
 
  • Consider your tenants carefully – are they long term tenants, are they going to treat your house with care, will they pay on time, will you let single rooms or the whole house, where will you get tenants from?