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 , Find a Tenant Online

Court call centres fuelling possession delays says Landlord Action

Since reporting a year ago that under-resourced county courts were overwhelmed by the number of possession claims being put forward, Landlord Action says the problem has not improved and is now being compounded by the use of call centres run by inexperienced temporary staff.  They warn other practitioners “If you want an answer quickly, be prepared to chase.” Twelve months ago, Landlord Action employed a full-time member of staff solely to follow up claims made to the courts. They wanted to ensure they continued providing clients with an efficient service, despite the challenges via third party delays.  However, with further court closures, it now transpires that some county courts are operating call centres, where temporary staff, with little or no experience, have been appointed to process claims and correspondence. In a recent routine phone call to follow up a case, an operator informed Julie Herbert, Head of Legal at Landlord...
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Government’s new over-crowding measures won’t stop sub-letting abuse

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Using contractors to carry out works on behalf of landlords

In recent years, the UK property sector has undergone massive changes due to the massive increase in popularity of “buy to let.” Not only have many more people bought properties to rent out, but also a whole section of the economy based around various contracted-out tasks has seen the benefit. For landlords, there can be many positive reasons to use various contractors to do work on their behalf, but there are also some common pitfalls that must be avoided. Multiple properties For those with only one or even two properties, a “hands-on” approach can be a practical way to get things done. However, some people will not have the time to do everything necessary, and if you are lucky enough to have a growing portfolio of properties, then there comes a point when it is simply unrealistic to think you can manage everything on your own. What do contractors do?...
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Special Offer: Free Carbon Monoxide Alarm with Free P&P

  The lovely people at Corgi are giving away free carbon monoxide alarms. Did you know that each year in the UK, around 50 people die from the effects of carbon monoxide poisoning. 4,000 people go to A&E (Source: Gas Safety Trust) due to the effects of the gas and 200 are hospitalised (Source: NHS, 2014). Not a very nice statistic! As landlords from the 1st October 2015 regulations require both smoke alarms and carbon monoxide alarms to be installed in rented residential accommodation. You can register here for a free carbon monoxide alarm The new legislation states: A Carbon Monoxide alarm is required in any room containing a solid fuel burning appliance (e.g. coal fire, wood burning stove).  (a) a carbon monoxide alarm is equipped in any room of the premises which is used wholly or partly as living accommodation and contains a solid fuel burning combustion appliance; and (b) checks...
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The Importance of Property Portfolio Insurance

Investing in property often involves years of hard work and canny decisions to build up a diverse and successful portfolio. Something so precious should not be left unprotected and vulnerable to loss or damage by the whims of fate. Property portfolio insurance offers a straightforward means of protecting ones assets against risk and loss and helps to provide peace of mind concerning ones future financial security. What is Property Portfolio Insurance? Property Portfolio Insurance is sometimes also known as Landlords Insurance and like any typical insurance, its primary purpose is to protect your hard earned assets from potential risks. The key benefit of this insurance is that multiple properties across an entire portfolio can be consolidated into one policy, making the organisational logistics more straightforward and simpler to manage. Different policies cover differing circumstances and there are certain criteria that must be met to qualify, depending on the chosen insurer. With...
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