What Help Do You Need When Buying An Investment Property?

If you’re thinking of buying an investment property, you’re probably wondering what kind of help you’re going to need.  We’ve put together some top tips for you to take into consideration before you make the leap to becoming a landlord.

What Is An Investment Property?

Put simply, an investment property is any real estate that you purchase with the sole purpose of generating income.  This income is usually generated by renting out the house, either as a permanent residence or holiday accommodation.

Am I Ready To Buy An Investment Property?

The buying process for an investment property is very different to the process involved in buying a family home.  You’ll need to make sure you’re ready for the expenses and responsibilities that come with being a landlord.  Here are some qualifications that you should meet before proceeding.

You Should Be Financially Stable

This is even more pertinent to investment properties than buying your own home.  Most investment property mortgage lenders will require you to put down a minimum of a 30 percent deposit; this is generally not needed for your own home.

You’re Sure You’ll See A Return On Your Investment

You should always calculate your return on investment (ROI) before purchasing an investment property.  ROI is the net annual profit, divided by your cash invested, times 100.

To estimate your annual rental income, take a look at the monthly rental of other similar properties in the same area, then times by twelve.

You Have Time To Manage Your Investment Property

Investment property management can take up a lot of time.  You’ll need to advertise the property, interview tenants, run background checks, make sure that rent is paid on time, perform routine maintenance and take care of repairs.

If you don’t have time to do this, consider buying an investment property that is totally hands-free and stress-free with guaranteed rental returns and management and maintenance included.

Alternatively, Hire A Letting Agent

Letting agents take the stress out of property maintenance and tenant management.  In exchange, they’ll take a percentage of your monthly rental income.

They’re a great choice if you happen to live a good distance from your property, or if you don’t have the skills to undertake maintenance and repairs by yourself.

Get Buy-to-Let Insurance

Buy-to-let insurance is also known as landlord insurance, and provides cover for the property and contents, as well as liability.

Buildings insurance

Before you can take out a mortgage on a property, most lenders will require landlords to prove that they have taken out buildings insurance.  This insurance will pay out if your property is damaged or destroyed, and will cover the costs of repair or rebuilding.

Contents insurance

Even if you’re not planning on furnishing the property, it’s a good idea to get contents cover in order to protect your carpets, curtains and any white goods.  Your tenants will be responsible for insuring their own belongings.

Landlord liability

This insurance will cover you in the event of the injury or death of tenants or visitors on your property. It’s usually optional, but it’s necessary to have a minimum level of liability cover in place in some cases. These include renting to students or in certain local authorities.

If you have any questions about the process of buying an investment property, give us a call on 03333 034 767 or send us a message.