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Buy To Let

The UK's Number 1 Property Investment Guide

Investing in buy to let property became popular in the 1990’s due to the introduction of Buy to Let mortgages.

In the current climate it has become difficult for a first time buyer to get a mortgage to get on the first rung of the property ladder. Therefore renting has become increasingly popular. Needless to say this is very good news for the property investor. You can create a great monthly cash flow if you do your sums correctly at the beginning.

So what does Buy to Let investing mean?

The basic idea is that you buy a property, using some capital of your own and some borrowed money (the mortgage). You then find some tenants to rent the property to. They pay you rent to live in the property. Hopefully the tenants cover all of your costs of owning the property and give you some positive cash flow. In addition to this cash flow, you get the benefit of significant capital growth as the property increases in value overtime.

The key to successful buy to let investing is to purchase a property in a location where there is strong rental demand and the rent “Stacks up”. This means that the rent is enough to cover all of the costs and still leave a profit for you at the end of each month. Each year you will have to pay income tax on your rental profit.

The main costs you have to cover will include:

  • Interest on your mortgage (always get an interest only mortgage)
  • Landlord insurance (make sure you get Landlords Insurance and not just a household policy)
  • Management fees (if you use a letting agent to look after your property for you)
  • Service charges (if you have a leasehold property)

Yields

Make sure you know how to work out the rental yield on a property. The calculations are shown below:

Gross Yield = annual rent/purchase price

Net Yield = annual rent less running costs/purchase price

We find it much safer to work with the net yield, as this gives you a truer picture as to what will end up in your pocket at the end of the month.You should also build in some contingency to your figures in case of a worst case scenario happening.

 

Subcategories from this category:

Finding a Tenant/Property Management

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Buy-to-let Investing: How to Do It Right

  Over the years, buy-to-let investing has been one of the most promising in the UK real estate market in terms of its returns. Under this scheme, you will be buying a property, and in turn, you will be looking for tenants to have it rented. This is the perfect choice for people who are looking for long-term investments as returns will not be yielded within just a short span of time. Considering this form of investment? Keep on reading and learn about some of the things that should be done to be assured of making the right choice and to lessen the likelihood that you will have regrets in the future. Find the Right Timing When it comes to buy-to-let investing, timing is key. As a property investor, your goal is to buy a property at a time wherein the price is low. More so, you also have to...
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Why Manchester is competing with London when it comes to buy-to-let investment

  Overseas buyers, as well as domestic buyers, are showing an interest in the property market in Manchester, and that is putting it on a level that is rivalling London. Currently, Manchester has the best performing property market beyond London, with rental yields reaching a high 6.02%. As a result of this, Chinese buyers are showing a real interest in the Manchester property market as opposed to the London market. The economy in Manchester has improved at an incredible rate since the IRA blast in 1996, which tore the city apart. The economy has doubled, the population has grown and employment is on the rise; and this will all be reflected in the residential market as demand will continue to be higher than supply. Manchester is also attracting a lot of visitors from the middle East, with visitor numbers increasing by 33% between 2011 and 2015. Visitors from the Middle...
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Shower vs. Bath in a Rental Property

  As a landlord, you are obliged to provide a bathroom for your tenants. Depending on how may bedrooms the property has, or whether you are running a House of Multiple Occupation (HMO), you may even be expected to provide several bathrooms. You won’t have room for a separate shower cubicle if the bathroom is small and compact, so the pertinent question here is whether installing a bath or shower is best for your tenants, and if you ditch the bath, will it affect the value of the property. Bathrooms are a valuable commodity. A new, modern bathroom built to a high specification will attract a better class of tenant. It will also make it easier to find a tenant, which for any landlord is a top priority. After all, void periods are costly and no landlord wants an empty property in their portfolio. Smart bathrooms from reputable companies such...
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Don’t Lose Out on Your Deposit When You Move Out

  Has the lease on your home come to an end? Well, if you’re moving on to rent somewhere else, part of your admin is going to involve getting your security deposit back. The only way to do this, however, is to ensure that you leave your house or flat in the condition you found it in (if not better!), so that your landlord has no grounds for deducting the cost of cleaning and repairs from your deposit. So, it probably goes without saying that you’ve a pretty big job on your hands. You’ll need to begin by ensuring that the condition of the property and its contents haven’t surpassed ‘reasonable wear and tear’ (something that your tenancy agreement probably refers to). If you’re not sure what reasonable wear and tear means, take a look at page 12 of this document. Beyond that, however, you’ll need to give the space...
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