Six key ques­tions for all po­ten­tial land­lords

Macclesfield Express - - SPORT -

BUY-TO-LET re­mains a pop­u­lar ven­ture, ac­cord­ing to prop­erty spe­cial­ist Lead­ers, which re­ports a sig­nif­i­cant in­crease in en­quiries from peo­ple plan­ning this in­vest­ment.

Lead­ers’ let­tings di­rec­tor Emma Wells said: “Prop­erty re­mains ex­tremely at­trac­tive to peo­ple look­ing for an in­vest­ment that will give them a higher re­turn than sav­ings and more sta­bil­ity than stocks and shares.

“Mar­ket con­di­tions for land­lords are ex­cel­lent across the UK and, if done prop­erly, buy-to-let will pro­vide a good monthly in­come along with cap­i­tal ap­pre­ci­a­tion over time.”

So what should you do for the best chance of suc­cess?

Here are six key ques­tions all fu­ture land­lords should ask them­selves be­fore in­vest­ing:

What do you want to achieve?

Un­der­stand­ing your mo­ti­va­tions and goals en­ables you to make the right de­ci­sions from the start.

Do you want an in­vest­ment likely to rise sig­nif­i­cantly in fu­ture value or would you choose a high rental re­turn over cap­i­tal growth?

Both are ideal but this isn’t al­ways pos­si­ble and choos­ing one over the other can en­able you to max­imise your re­turn in the way that best suits your aims.

What’s your bud­get? The amount you have to in­vest, along with how much you are able or will­ing to bor­row, will in­flu­ence where and what type of prop­erty you can buy.

No mat­ter your bud­get, your rental in­come must more than cover your mort­gage pay­ments and other costs to make a profit and you should have a con­tin­gency fund for un­ex­pected prob­lems or void pe­ri­ods. Where, what and who? Do you have a par­tic­u­lar area, prop­erty type or ten­ant in mind?

Each one im­pacts on the oth­ers so iden­tify at least one and go from there.

If you don’t mind who rents your prop­erty but want it to be nearby, iden­tify which prop­er­ties are most in de­mand lo­cally and give the best re­turns.

To iden­tify where, what and who is best for you, con­sult an in­de­pen­dent agent with an in-depth knowl­edge of rental de­mand na­tion­ally and in ar­eas pop­u­lar with ten­ants.

What will your re­turns be?

By di­vid­ing the an­nual rent by the value of the prop­erty you can cal­cu­late a prop­erty’s rental yield. Av­er­age yields are around four to six per cent.

To cal­cu­late net re­turn you need to take into ac­count all costs such as fur­nish­ing, main­te­nance, mort­gage re­pay­ments, agent and ac­coun­tant fees, in­sur­ance and tax.

What are your le­gal obli­ga­tions?

Land­lords must com­ply with a num­ber of rules, reg­u­la­tions and tax obli­ga­tions or face se­vere penal­ties. Th­ese are fre­quently up­dated so it’s im­por­tant to stay in­formed.

Do it your­self or use an agent?

The an­swer will de­pend on how much time and ef­fort you want to de­vote to your in­vest­ment and how nearby your prop­erty is.

Let­ting agents of­fer a range of ser­vices – from find­ing and vet­ting ten­ants to man­ag­ing ev­ery­thing for you and guar­an­tee­ing the rent. Al­though they come at a cost, their fees are tax de­ductible.

A good agent can save you time and money while min­imis­ing your risk and help­ing you max­imise your re­turns.

●● Buy­ing to let is a an at­trac­tive way to in­vest your money

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