A lot of people think that buy to let mortgages are an easy way to make fast money. In reality, owning a property is not an easy process nor is it one that you should undertake lightly. They can be a great deal of work and there is potential for financial ruin if you do not play your cards right. That being said, in the long term a buy to let mortgage can help you build wealth with little investment on your part. As long as you are willing to do the work that it takes and to stay on top of your investment you will probably see a big return.
Buy To Let Mortgage Golden Rules
Rule #1: Location is everything. Even though it might seem smart to buy in a super fancy neighbourhood you might find that few people want to let there or that the neighbours would rather have other homeowners in the neighbourhood. Instead, try to find a good home in an area where people want to love that is close to schools, transport, and shopping.
Rule #2: Understand your potential clients. If you buy in an area that is populated by young families you will want an inexpensive home with a few bedrooms but if you are buying in an area populated by college students then perhaps a small apartment close to campus or with good public transport access is a better choice.
Rule #3: Get references on your tenants. Anyone can make a good impression, do not let it fool you. You need tenants who are going to take care of your property and pay their rent on time each month. Take the time and spend the money necessary to get background checks and personal references on anyone interested in your property.
Rule #4: Have a budget. Buy to let mortgages have costs above just that of the monthly payment. Be sure that you have enough money to get it started and that you charge enough to cover those initial costs. Also, make sure that your investment property budget includes a little extra to set aside for emergency expenses so that you do not have to cut into your personal money for these costs. If you wind up with a big surplus at the end of the year use it to make an extra payment or for an investment.
Rule #5: Get good insurance. There are many types of insurance available including a home warranty. These warranties can cover big costs like replacing plumbing, water heaters, and heat or air conditioning units. Invest in one that covers these items so that you avoid getting slapped with a huge repair. Also make sure you have good quality homeowners insurance that will protect your investment in the event of a disaster. Also, note in any lease agreement that tenants are responsible for renters insurance on their personal items.
Rule #6: Use a professional let agreement. You never know what could come up in the process of letting a house or apartment. By enlisting the help of a professional you can ensure that your lease protects both you and your tenants no matter what happens. You might also consider using professional accountants and solicitors to make sure all of your ducks are in a row.
A buy to let mortgage can be a great investment, just do not expect it to be easy money. You will hit some rough patches along the road of dealing with tenants, home repairs, and expenses. Make sure you have some extra cash on hand at all times and be patient and success will eventually come your way.