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

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Where are the best buy-to-let areas within London?

    The rental prices in London are continuing to rise at a considerable rate but for investors, understanding the best area to invest is crucial. There are many areas that offer excellent capital gains and returns that they have to be investigated. London London stands head and shoulders above the rest of the country when it comes to investing. Property prices are on the up and capital growth is higher than average and for landlords who are still interested in London property investments, rental yields offer excellent levels of return. In the main, east and south London offer the best yields with the West of the city seeing the best capital gains. East London buy-to-let hot spots Yields in East London are over 7% and it has some of the best buy-to-let postcodes in London. Newham performs extremely well but the area does not have the best reputation although it...
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The Ideal Tenant for a Live-in Landlord

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Half of Tenants Would Leave Town To Achieve Dream Of HomeOwnership

More than half of tenants would move or consider moving to a different town or city in order to buy a home, according to a new poll of private renters*. The poll found that just over a quarter of tenants (27 per cent) would relocate in order to buy a house, and a further three in ten (29 per cent) would consider doing so. However, forty four per cent of tenants said they would not move to another town or city even if it meant being able to afford to buy their own place. Tenants in London were the most open to the idea, with 87 per cent saying they would relocate or consider relocating in order to buy a home. However, tenants in the East Midlands were the least receptive to the idea, with just 14 per cent willing to relocate. The research also shows that almost half of...
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For the ambitious among you who have decided to invest in property, it is highly likely that you are dreaming of the day when you can retire early and live off the returns of your shrewdly crafted property portfolio. After all, you didn’t choose to buy property for the fun of it – everyone who makes the decision to buy multiple properties wholeheartedly believes that they are making wise and ultimately fruitful investment decisions. Once you have multiple properties in your portfolio, you will begin to notice growing commitments and pressures. This is where property portfolio management software and experienced experts can step in to facilitate the process of developing a solid and profitable property portfolio and to warn you of dangerous pitfalls. Listed below are some of the most common mistakes property investors make that stand to cost them dearly in terms of time, effort and money. They become...
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