1. Research the market in your area
If you are just entering into buy-to-let, you must ask yourself a several
questions. what do you know about the market? Do you know the risks, as well as
the rewards,
you should follow the local
news and really get an understand of the community you are about to make a
large investment in.
Make sure a buy-to-let is an strategy you are sure you want. Your funds
could do better elsewhere. In 2007 a high-rate savings account would beat most buy
to let investments. Now that rates are much lower, investing in buy-to-let forces
you to tie up capital in a house that may drop in value. You should then compare
this to the rate of a annual return on a fixed rate savings fund or an equity
fund.
You could also get a similar return from an investment in funds, shares or
an investment trust - paying just 10 per cent tax on money earnt and getting
tax-free capital growth if you use your Isa - with the ability to sell up
quickly if you want and have a fluid form of capital.
If you know someone who has entered the buy-to-let market, ask them about
their experiences and try and learn as much as you can from estate agents who
are normally happy to talk you, just remember that they are likely to try and
sell you something.
You should visit online Message boards and talk to other buy-to-let
investors when possible to learn more.
2. Choose a promising areas or streets in Amber Valley for buy to let
Promising does not mean the cost but more the potential . Promising
means a place in Amber Valley where people would enjoy living and this can be
for a variety of reasons such as transport links, pleasant areas, schools,
employment.
Where in Amber Valley has a additional value ? If you are in a commuter
belt, where has good transport links? Where are the good schools in Amber
Valley for young families? Where do the students in Amber Valley want to
live? Asking yourself these questions might sound over simplistic, but they are
probably the most important aspect of a successful buy-to-let investment
You should look at Zoopla: Check the rental market and homes to buy and
compare as much as possible
3. Do the sums
Before you think about buying you should start by looking around houses or
flats sit down with a pen and paper and write down the cost of houses you are
looking at and the return you are likely to make.
Traditionally buy-to-let lenders wanted rent to cover 125% of the mortgage
payments, although many had relaxed this in the boom years. Most also wanted a
15% deposit, which protects against falling prices.
After the financial crisis, many are now demanding upto 25% deposits, or
even larger, for rates considerably above residential mortgage deals. The best
buy-to-let mortgages also come with additional arrangement fees.
Once you have the mortgage rate sorted - and remember to allow yourself a
margin for rate rises in years to come, be careful in deciding will your
investment work out?
What will happen if the house or flat sits empty for a month, two months or
even three? These are all things that must be consider. Make sure you know how
much the mortgage will be and if it could rise or fall.
