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

Landlords – Get Switched on NOW

Article by Paul Shamplina There are so many new changes in the world of buy-to-let, making it increasingly difficult for self-managing landlords to keep up with current legislation. The Deregulation Act, which introduced new regulations on 1st October 2015, means that landlords and agents arranging new tenancies or renewals after this date now have more obligations to contend with prior to commencement of a tenancy. A ‘How to Rent’ guide must be issued to tenants so that they understand their renting responsibilities.  Landlords must also provide up to date Gas Safety, Energy Performance and Smoke Alarm certificates, and ask tenants to sign receipt of these. My advice is to get this done at the same time as signing the tenancy agreement. If you fail to do so and the relationship with the tenant breaks down for any reason, a tenant may make it difficult for you to gain access, which...
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3 Ways to Reduce the Stress of Selling Your House

Selling your house is one of the most fraught, stress-inducing experiences that you’ll ever have to endure. There is so much riding on your transaction going to plan, from your financial situation to the next property you’ll buy, your ability to expand your family, and the job opportunities available to you. For lots of people, this simply becomes too much. Their stress levels rise, their anxiety levels peak, and they swear that they’ll never go through it again. Luckily for you, you don’t have to be one of them. There are lots of ways to ensure that your sale goes as easily and smoothly as possible, and here are three of them to inspire you… 1: Price Your Property Realistically A common ploy by homeowners is to price their property for more than they actually want. The idea behind this is that it will leave some wriggle room for negotiation,...
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A Great Property Book from Simon Zutshi just got BETTER

Claim your complimentary copy of Property Magic by clicking here now. Even the experts, in fact particularly the experts stay up to date with what’s working and what’s not in property investing. Speaking to the experts is always great, nothing beats ‘picking their brains’ on the latest tips, but finding the time can be hard, so it’s great when they recap their latest ideas in writing. Simon Zutshi, founder of the property investors’ network has always been very good at simplifying the strategies and concepts that he teaches, which means that people like you can achieve incredible success in a relatively short space of time.   Simon has used the same teaching style in his excellent book Property Magic, which was first published in 2008 and has been an Amazon best seller ever since. It is an inspirational book, which explains how anyone can build a cash generating property portfolio using...
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Six things you should know if you buy a property in a flood zone

      Flooding is an increasing threat for both residential and commercial property owners across the UK.  With a growing number of properties prone to any combination of river, sea and surface water flooding it’s important to be armed with as much knowledge as possible before you purchase a property in a flood zone. Flood Excess Insurance has provided the answers to six common questions:   How do I find out if my property is in a flood zone?   There are a number of different resources which provide you with information about the flood risk for a property. Firstly you can visit the Know Your Flood Risk website here where you can obtain a report created using trusted data from reliable resources which will tell you about historic flood events, the risk of river and sea flooding and ESI Groundwater stats. The Environment Agency also has an excellent resource...
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Retaliation Eviction - Can the Councils Cope?

Today [Thursday 1st October], as part of The Deregulation Act 2015, a whole range of changes come into force which affect whether or not a landlord can serve a Section 21 notice on an assured shorthold tenancy (in England) as well as changes to the form itself. However, following lengthy consultation, leading tenant eviction firm, Landlord Action, has raised concerns that not enough has been done to inform landlords of the changes and questions whether the Government has enough resources in place to properly enforce measures against so-called ‘retaliation eviction’.

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