Flats in Edinburgh New Town
Reacting to the first advert or repossession auction notice you see, advertising property at knock down prices is not the best approach.
Research is the key to successful Buy to Let investment.
First, examine your personal objectives of becoming a Buy to Let investor.
Ask yourself what is the level of commitment you are prepared to invest; most elements of property management are factors of Time & Money ; so if you don’t have the money to pay for services you will have to invest your time.
If you are time rich, then be prepared to become an expert in Property Repair, Customer Relations, Advertising, Financial Management and not least Juggling.
If you have a surplus budget and prefer to out-source all or some of the above services make sure the books balance, after all this is a money making exercise not a charity.
1. Area: when considering which areas to invest in look at the following:
How dense is the population, is it a university town for example, is it a centre of good employment and are there plenty of schools and shops, lastly are there a reasonable choice of property related services; just in case you need them.
Once you have pinpointed possible areas, consider the distance they are from your base, especially if you are going to manage the business yourself; there is nothing more frustrating than spending a Sunday morning driving long distances only to be greeted by an ungrateful tenant.
2. The Property: is the area of choice active in the rental market, if so take the time to look around a few properties which are to let, consider their condition, facilities, the going rent and, observe how long they take to let out. Determine from this research what factors may have caused a home to let more quickly. Although, you may have to bring the property up to scratch in the first place, you want a property that does not have onerous maintenance issues looming.
3. Property Services: Some letting agents will give advice on how to present a property to market..but beware not all agents are good at their jobs so be open minded and check out at least three or seek recommendations. An area with many letting agents and related services generally indicates that the rental market is active, the converse may also be true.
Remember, you want an investment that will bring in regular rent and that means few void periods. You want good tenants; preferably in employment, honest, clean, quiet and content..
It’s a tall order and you may not have the choice if you don’t do your research properly in the first place.
Next time.. you have decided on the area and the sums look good, how do I comply with legislation?
Edinburgh Old Town
The private rented sector is an important if small section of all housing in Scotland, representing about 8% of all housing in the country.
Private sector renting is most popular with the age group 25-34 who prefer to keep their options open when considering where to live.
Property prices in Scotland although lagging behind the rest of the UK have fallen over the last year or so, you could argue therefore, that there has never been a better time to become a Buy to Let Investor.
In support of this Interest rates have never been lower at 0.5%, sadly though this rate is not reflected in the rates offered to Buy to Let Investors. Currently a typical investor would expect to pay in excess of 5%; depending on the Loan to Value. Lenders are asking for at least a 25% deposit on the current Valuation and an estimated rental return in excess of 120% of the monthly rent received. If you are happy with all this and income rather than short term capital gain is your priority then
read on..
The Scottish Government aims to encourage a thriving private rented sector, which provides good quality and well managed accommodation, and in which both landlords and tenants understand their rights and responsibilities.
They will help or hinder you depending on your perspective in the following ways:
- Landlord registration: private landlords must register with their local authority to ensure that minimum legal requirements are met.
- Voluntary landlord accreditation promotes best practice in management standards in the private rented sector. The Minister for Communities and Sport announced in 2007 that the Scottish Government would provide start-up funding for a national voluntary landlord accreditation scheme, Landlord Accreditation Scotland, open to private landlords and letting agents across Scotland.
- Mandatory licensing of Houses in Multiple Occupation (HMO) applies to houses or flats occupied by three or more unrelated people who share bathroom or kitchen facilities.
- The Repairing Standard increases legal requirements on repair and maintenance in the private rented sector, which tenants will be able to enforce more easily through the Private Rented Housing Panel.
- Provisions in the Housing (Scotland) Act 2006 would allow the establishment of schemes for safeguarding tenancy deposits. The Scottish Government is examining with stakeholders the merits and cost effectiveness of various approaches to safeguarding tenancy deposits before considering how to proceed.
So..It’s beginning to look like a plan. An alternative to ploughing hard earnt cash into poorly performing pension’s maybe or, who knows your next job.
Over the next few weeks I will discuss what you should thinking about before taking the plunge.
Helen Clover- Edinburgh, UK
