Real Estate Buy-to-Let

Author: John Don

Author: John Don

Here, you really cannot afford to make mistakes or pay over the odds for renovation or redecoration. Every single penny has to count because with buy-to-let you are essentially establishing a business on which you will have to pay tax and make annual tax returns. At the same time, the buy-to-let market is becoming smarter, more sophisticated and competitive all the time, which means that a dingy, dated rental apartment will not appeal. Some landlords like to buy places that need just a little bit of work as they believe that they will thereby get a bargain.However, that 'little bit of work' needs to be done before you can hope to rent the place out. Briefly, these are the main questions to consider before embarking on buy-to-let: What is the actual rental market like in your area, both in terms of personnel and achievable rent? What is the supply? What is the demand? As when buying a home, those who rent will only be able to afford to pay a proporbon of their salary. There may be a slight premium achievable for a really nice flat in top-notch condition, but it will not be a significant extra. So you need to find out from letting agents which are the most popular types of rental property in any one area and how much tenants are prepared to pay or can afford to pay. Also, discover whether or not any particular area already has a huge glut of rental properties awaiting tenants. You may not feel you want to add to the oversupply. Then you have to find out how much you will have to pay for your property, how much it will cost to do up and how much you can hope to achieve in rent. These figures have to be worked out very carefully indeed, with every last penny budgeted and accounted for. Unless your figures indicate that you can achieve at least 7 per cent of the total purchase price, including renovation, in rent, the property is best avoided as otherwise the margins are too narrow and would not allow anything spare for emergency repairs or renovation. You cannot operate too near to the margin as, above all, rental properties are bought in order to achieve instant or near instant income. With rental properties, you cannot take the possible capital growth into account, although, having said that, there must be an achievable sale price. Beware of properties that seem suspiciously cheap.About the Author:

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