4 things to consider if you're thinking of becoming a landlord

Interest rates are remaining low and this is good news for anyone thinking of becoming a landlord in the near future. Buy-to-let business ventures are attractive to many looking to boost their monthly income and invest money at a time when savings accounts promise little or no return at all. Still, becoming a landlord can be risky business especially when it’s a first-time investment. Below are four things every potential landlord should consider when considering a buy-to-let investment.  

Know Your Tennant

This may strike like doing things in the wrong order (surely you need a property first?) but knowing your tenant in this instance is all about the best targeting. By first establishing who your ideal tenant is you’ll be able to build up a profile of the kind of dwelling that’ll be most appealing, the best area, and amount of potential rental income. The kind of tenant you want to target will influence all the decisions you have to make, from the size of the bathroom to a commute friendly location. Having a clear idea of your target tenant prior to investing will help you rent the property in the shortest amount of time. 

Know the Area

Picking the right area for investment is never easy. First you must decide whether you’d like the property to be located near to where you’re based, further out or in a different city altogether. Being as objective as possible here is best, maybe you wouldn’t personally want to live in a certain area but what about your target tenant? Always referring to the first point will help to keep you on track through the decision-making process. Likewise, if a certain location is exactly what you want then you may have to readjust the idea of your target tenant to avoid disappointment. 

Know the Budget

Comprehensive planning, encompassing all possible costs, is the only way to get a realistic financial picture of the potential costs you’re likely to incur. Whilst most landlords will be looking to get extra income from their properties it’s not a bad idea to see if, worst case scenario, you’re able to cover the cost of two mortgages should the need arise. The general process of buying a buy-to-let property will be very similar to the purchase of a regular one, thus subject to the same fees: deposit, legal fees, stamp duty and one necessary extra - landlord insurance, check out reputable brand Hamilton Fraser. It’s a good idea to have some budget set aside for the unexpected as a buffer so you’re not caught off guard. 

Know the Law

Becoming a landlord means taking on particular responsibilities and it’s important to become acquainted with them prior to making an investment. By purchasing an investment property you’re in effect becoming a small business and will have to declare any extra income for tax purposes, through yearly Self-Assessment tax returns.  Other legal responsibilities will include a range of certificates (gas safety, energy performance, and more) that classify the dwelling as safe and inhabitable. Skipping those steps is not an option since no estate agent will rent a property without the complying certificates and you’ll be exposing yourself to legal issues if you rent privately and your tenant discovers that you cut corners.