Buying your first investment property

30 03 2010

I’m going back to basics in this post. I have spoken to a man today who is looking into becoming a landlord for the first time and isn’t really sure what he needs to do. I suspect this is quite common actually, so for anyone out there who has thought about buying investment property and wasn’t really sure where to start, here is a quick run down of what you need to know.

Buying the property

It goes without saying of course that you need to buy a property first. Generally small to medium type houses give you the best return for your investment. 2 bed terraces are hot in our area in particular.

When buying the house you will need to arrange a buy to let mortgage. This works basically the same as a normal mortgage would, except that in a normal mortgage contract there is a clause saying you can’t let the property out. You should speak to your bank to arrange this. If you need any help with arranging a buy to let mortgage for a house in or around stoke then please get in touch with us here at Belvoir! Contact Belvoir!

How does property management work?

Once you have your property you will need some tenants. There are plenty of options here:

The DIY option: You can find your own tenants… Although I wouldn’t recommend that. It may be cheaper, but if you get a letting agency to help you, you will probably have it let sooner, and that will more than make up for the cost.

Tenant Find Service: Your next option is to use a letting agency to find you the tenant, and then manage it yourself. This means that the agency will find and verify your tenant for a fixed fee. After that you will be in control of the tenancy, and be responsible for all of the maintenance on the property.

Full Management: This is the option I would recommend. A property management service (offered by most good letting agents) will handle absolutely everything, they will find your tenants, keep them happy, arrange contractors to handle any maintenance and make sure that rent is payed. They will also make sure the tenants are treating the property well and they will arrange viewings when the tenancy is about to end.

The third option is of course more expensive than the others on the face of it, but there are many advantages which in most cases do actually make it the better option financially due to all of the ways it actually saves you money. For more information on the pros and cons of full management see my recent post The problem with going it alone.

Other things you need to know

Council tax. It is your tenants responsibility to pay council tax. You are not liable for this. On buying the property it is worth contacting your local council tax office to inform them that it is a buy to let property and they will tell you what you need to do from there.

Buildings insurance. You will be the owner of the building, and it is therefore your responsibility to insure the building. After all, if it falls down, that’s your investment gone.

Contents insurance. If you are letting the property unfurnished then you don’t need to worry about this, it is up to your tenants whether they want to insure their belongings or not. If you are renting it furnished then you may want to arrange contents insurance for the furniture only. You can speak to any insurance company about this.

Landlords insurance. You can also get insurance to cover rent and various other liabilities associated with becoming a landlord. This isn’t too expensive, and if you do go with a letting agent they will be able to help you with that too.

Well, I hope you have found that helpful. If you are considering buying an investment property in or near Stoke On Trent then please get in touch with me and I’ll talk to you about whatever you’re stuck with.

If you just want general advice, no matter where you are please leave me a comment and I will do my best to help.

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