In 2023, one of the key ways for individuals to gain a persistent additional income stream is to consider buying a property for the rental market. If you buy a home and then rent it out to a tenant (or a group of tenants), you can charge a total monthly fee for living in the property. This may also include the payment of standard charges such as electricity and water usage and council tax fees. Many investors find that buying to rent gives them a significant second income and has the added benefit of owning a property that can be sold to release substantial funds. If you are planning to enter the buy-to-let property market, it is imperative that you consider some key steps in this process. This article explains three key steps to take before purchasing a buy-to-rent a property.
Consider the deposit
As a primary consideration, it is important to understand one of the key differences between buying a property for your own use and buying to let. If you are buying your own property to live in, you can expect to be required to pay a deposit in the region of 5% of the home’s total value. However, in the buy-to-let market the deposit amount is much higher, typically being at least 15% of the total property value and often as much as 25%. In short, this means that property investors will need to commit considerable sums of money to any property to allow it to be rented out. If you do not have access to these funds, it can be valuable to wait for a few years and ensure that you have saved sufficient funds without needing to rely on outside lending agencies and take on additional repayment costs.
Speak to specialists
It is vitally important to speak to buying experts to let properties such as Invision Property. These professionals will be able to answer any questions you may have about buying to let and will give you a greater understanding of the steps needed to secure such a property. They will also have up-to-date information on the property market and how it is affecting property values. Remember that the housing market is subject to fluctuations in value over a given period. If the market is high, then purchase costs will also be expensive. It may be better to consider holding back on a purchase, especially if the property market is predicted to drop in value in the foreseeable future.
Think of your tenant
Another key consideration when renting out property is to consider the needs and wants of prospective tenants. Depending on their circumstances, they may prioritize certain properties or locations that suit their needs. For example, a young family looking to rent a property would view local parks or play areas as a key benefit in renting a property. Conversely, elderly tenants may prioritize having local amenities such as shops and healthcare facilities in their decision of which property to rent. Put simply, decide on what type of tenant you are looking to have in your property and choose a home that will appeal to their needs.
