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Investment in property is many people’s go-to choice for generating a second income. Many people Investing in property is an attractive route for many people. If you’re looking to generate a second income, or even go full-time landlord, there’s heaps to consider before you take the leap into buying to let. Here’s 6 tips to help you get the most out of your investment.

1. Choose your area wisely

This is all dependent on your budget for the initial purchase. It’s all about what you can afford and would like to buy, and how it’s relevant to people who may wish to rent the property from you. For example, if you’re buying a family home to rent, what are the schools like in the area? Are there good transport links? What are the crime rates?

Choosing a promising area is easier said than done, but by putting in the time to research you can mitigate the risk of being stung later down the line. If you’d like to keep an eye on your property, it may be worthwhile purchasing somewhere close to where you live. Although it can be said that you’re already invested in that area’s property, and choosing somewhere further afield could be more beneficial to spread your coverage.

2. Negotiate on price where possible

This is all dependent on your budget for the initial purchase. It’s all about what you can afford and would like to buy, and how it’s relevant to people who may wish to rent the property from you. For example, if you’re buying a family home to rent, what are the schools like in the area? Are there good transport links? What are the crime rates?

Choosing a promising area is easier said than done, but by putting in the time to research you can mitigate the risk of being stung later down the line. If you’d like to keep an eye on your property, it may be worthwhile purchasing somewhere close to where you live. Although it can be said that you’re already invested in that area’s property, and choosing somewhere further afield could be more beneficial to spread your coverage.

3. Think about your level of involvement

Buying a property is the easy part. Once it’s yours, the hard work really begins – and you need to consider how hands on you’d like to be. You’ll have to decide whether you’ll rent it out yourself, or pay an agent a management fee to do this for you. If you go down the agency route, you may cut into your margin but you also pass much of the work to them and their network of professionals who look after repairs and advertising.

If you’re doing it yourself, however, you’ll be making more money. If you are going to be a hands-on landlord, be prepared to give up evenings and weekends where needed. Either way, you should ensure you’ve got a personal relationship with your tenants. This can only be a positive, and helps to improve your reputation as a landlord.

4. Understand the drawbacks of buying to let

Before making any kind of investment, the pros and cons need to be thoroughly deliberated. Should property prices dip, will you be able to keep hold of your investment? Even the best properties in popular areas can sit empty through nobody’s fault.

As a landlord, you’ll also need to fork out on inevitable repairs. If a costly job comes along, such as a new boiler or water damage, will you have enough money in the bank to cover the costs? If the answer is no, hold off on investing until you’ve got the capital to cover unforeseen costs.

If your property is in need of repair, ensure that you seek professional advice to fix the issue properly. Cutting corners and repairing the issue may seem like a good idea to reduce costs however, if you are looking for a long-term tenant, you may be better off investing in your property to ensure that you are providing a safe and happy environment for your tenants. A trusted tradesman like Stephenson and Son will be able to provide you with a free quote for your repair work.

5. Consider your ideal tenant

Who are you looking to rent to? This is important when you’re purchasing your property, as you want to make sure it aligns with their needs. If you’re looking to rent to students, they wouldn’t be interested in anything massively luxurious. It would be out of their price range, and therefore your property could be sitting empty. If you’re renting to families they’re likely to have lots of belongings, so space is a necessity.

Considering your ideal tenant before you buy makes for a more informed purchase, which subsequently leads to happier tenants. This hopefully means they’ll stay there for longer.

6. Look further afield or renovate

If you’re a buy-to-let investor, it would be easy to buy close to where you live. This is what most people do, as it allows them to keep tabs on their property. However, if you’re going down the agency route as explained in point 3, they would manage this aspect for you anyway. This frees you up to look for the ideal location – one that’s promising and is likely to give you bigger returns in the future.

If a property needs improvements making, you have more leverage when it comes to negotiating a buying price. Then, once agreed, you can renovate and add more value ready for willing tenants to rent. A property may look run-down, but replacing a tattered carpet or warped wood flooring and a new lick of paint can make a huge difference. You do need to consider, however, the potential cost of the renovation and whether the reduced price will cover this. Renovation budgets are often stretched as well, so be sure to allow for this also.

When you’re looking to purchase a property for the sole purpose of renting, it’s often to generate a second income. Although it seems appealing, it doesn’t always work out and this is often due to poor preparation. Ensure you do your research – consult an advisor if necessary – and be confident that this will work for you.