At Reeds Rains we are proud to have over 150 years experience of providing a first-class letting and management service, so we are going to give you 15 top tips for ensuring your Buy to Let business is as successful as possible.
Before you look at any properties…
1. Clarify your investment objectives. What do you want property to deliver for you: how much money do you need to realise, when and how?
2. Thoroughly review your finances with an advisor or wealth manager. Look at where your capital is currently and work out whether it could work harder for you in property.
3. Plan your exit from the beginning. Do you intend to sell at a certain point to realise equity; will you hold your portfolio into retirement; are you planning to pass your properties on to family…? You should make those decisions at the start of your investment journey so that you can ensure you buy, own and profit from property in the most tax-efficient way.
Securing the right property
4. Get to know your micro-market. Take advice from our local property experts. They can help you check the performance of prices and rents locally over the last 5-10 years and look into the current and likely future supply and demand within the rental market.
5. Have the right team behind you. You should look for professional advisers who have a number of years’ experience in Buy to Let and, if possible, go for people who invest in property themselves. You need a solicitor, mortgage broker, tax adviser, surveyor, letting/managing agent and maintenance contractors who understand the importance of getting things done quickly and correctly. If you need any help finding the right professional advisors, we can always make recommendations so do come and ask us.
6. Thoroughly ‘stress test’ the viability of each property investment before you buy. Look at the best and worst-case scenarios for income, expenditure and voids; plan for mortgage rate rises; make sure you account for tax on income and gains, so you get a full picture of what the property can ultimately deliver to you.
7. Try to buy at a discount. That doesn’t mean going for a supposed ‘BMV’ deal from an investment company; it means trying to find a motivated seller who will take less than the market value in return for a quick, professional sale. If you can build in equity from the start, it gives an instant cushion against any unforeseen market corrections.
8. Have a structural survey. This is more expensive than a HomeBuyer survey but, unless you’re buying off plan or a new build, it is wise to have a structural survey as well as electrical and gas safety checks. This ensures you know what repairs and renovations are required to let the property legally and should help you avoid any nasty, expensive surprises down the line.
9. Refurbish, decorate and furnish for your target market. Different tenant types have different ‘ideal’ properties, so talk to us to find out exactly what local tenants are looking for before you decide on your interior. Tenants typically like:
- Modern kitchens and bathrooms
- Neutral walls and carpets
- Ample storage.
10. Research the right letting and managing agent. Some landlords choose to handle everything themselves in order to save money but, with new fines available to local authorities, this can be a false economy. As a minimum we suggest you use an agent with Client Money Protection. At Reeds Rains, we are self-regulated through ARLA Propertymark. Both of these will soon be legal requirements for agents, so make sure anyone you are working with meets these minimum standards already.
11. Make sure you’re properly insured. When you let property, do consider taking out specialist landlord insurance, which should include cover for malicious damage and public liability. We offer a range of products, backed by AVIVA, including rent protection and portfolio insurance – see our website for details or call into a branch and speak to one of the team.
Managing your investment
12. Have a long-term maintenance plan. If we manage your property, we will organise repairs and periodical inspections, but you should put together a maintenance budget and schedule for the lifetime of your investment.
13. Keep voids to a minimum. If you bought well (the right type of property in the right area, according to local demand) and maintain your Buy to Let to a good standard, you shouldn’t have many problems finding tenants. But if circumstances change and, for whatever reason, demand drops, voids are the biggest cash flow killer for landlords and you’re almost always better off taking a slight reduction in rent rather than having the property standing empty.
14. Always act quickly with tenants. One of the biggest irritations for tenants is feeling ignored by their landlord or agent, we will act quickly, so if they contact you directly about a problem, make sure you respond as quickly as possible and keep them updated as you work to resolve it.
15. Review your portfolio every 6-12 months. It’s wise to check on how your property investments are performing on at least an annual basis.
We’ve been helping landlords for over 150 years, so there’s not much we don’t know about making a success of Buy to Let! Whether you’re thinking of expanding your portfolio, looking for new ways to maximise returns or simply need some professional advice from our lettings or mortgage teams, please do get in touch with your local Reeds Rains branch.