BEFORE YOU GET CARRIED AWAY CONSIDER THE FOLLOWING TIPS:
Arm yourself with a level-headed, business-focused approach. Leave emotions out of the buying process. These are, after all, properties that other people will be living in, not you. Take a long-term view. Do your research. Don’t just jump into the property market blindly.
Ideally, buy in an area and market you know and where the rental market is strong.
Determine what sector of the market you wish to target e.g. skilled, upwardly-mobile professionals and couples, families with children, students or the corporate market.
Identify areas that have access to business hubs, schools, universities and colleges, or transport links, as these relate to your identified market sector.
Consider areas that are primed for significant growth and where housing supply is limited. These are typically areas where developments are in the pipeline or regeneration is taking place.
Smaller two- and one-bedroomed properties that are typically priced to actively attract young professionals are currently generating the most growth.
Always ensure you have a cash buffer in case of tenant defaults, rental voids or unexpected problems.
Unless you are prepared to take a 24/7 hands-on approach, a letting or management agency might be preferable especially if you don’t live near your rental properties. While fees vary and depend on the rental mandate, agents could charge a 7% finders fee and 10% (plus VAT) monthly management fee of the rental income that includes sourcing, vetting the tenant and dealing with maintenance issues.
If you are determined to shun a rental agency, ensure that you thoroughly check references of potential tenants, obtain a deposit, draw up and ensure you obtain a signed contract from the tenant and adhere to all the requirements of the recently amended rental laws (see issue 7 August 2014).