Despite the global economic downturn, the property sector is booming! One of the most lucrative niches is the “buy to let” market. In a nutshell, you buy a property and then you rent it out to tenants. Let’s face it; not everyone can afford to buy houses.
But, they don’t want to live at home forever, of course. That’s why it makes sense for them to rent instead of buy. As a landlord, you can capitalise on that need by providing people a place they can call home.
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If you want to set up a new business, it’s worth building a property portfolio. You can start with just one house, and buy more as soon as you’ve got the resources. And, of course, you run those rental properties just like you would any business. You offer a service (i.e. a property to rent) and make an income from the rent you charge.
The profit you make will vary. That’s why it is important you know what you’re doing when you’re buying and renting out places. Today’s handy business guide will tell you all you need to know!
Organise a mortgage before you start
Some people assume that all property developers have millions to spend! In reality, nothing could be further from the truth. It’s likely you will need to borrow some money to get started, just as you would with any business.
Because you aren’t buying a place to live in, you need to get a specialist mortgage. It’s worth arranging this before you start looking at houses to buy. Why? Because you will know your total budget! Once you are pre-approved, only then should you start looking for a property to snap up.
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Research the right location
Because you don’t have an unlimited budget, you need to take care when you buy a property. It’s crucial you select a location that ticks the boxes, so to speak. For example, the main things to identify are:
- Good public transport and road links;
- Off-street parking;
- Low crime; and
- Nearby schools, hospitals and amenities.
Those are the things that are important to tenants, so make sure you’ve got those bases covered.
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Make sure you are a good landlord
Nobody wants to rent a house that’s falling apart and unsafe! Nor do they want to stay somewhere that could be dangerous to their health. As a landlord, you need to make sure you carry out your side of the deal by taking care of any problems.
Tenants also have responsibilities too, but how do you know what you’re liable for and what they have to do? The handy guide over at http://www.makeitcheaper.com/business-insurance/landlord-insurance/landlord-vs-tenant.aspx covers this area.
Put money aside for renovation work
There will come a time where your tenant will want to move out of your property. When that happens, you’ll need to renovate it back to a good habitable standard again.
Even if your tenant took care of your property, you’d still need to modernise it before you can rent it back out. Ensure that you put some cash aside for the work.
Good luck!
Featured image credit: ShutterStock
