Top Five Mistakes to Avoid In Buy-To-Let Investment
Whether you are looking for capital growth or rental yields, property investment requires a lot. Many prospective investors try to ask whether or not buy-to-let investment can really yield substantial return. The answer is ‘YES’, if you are considering this investment as a primary option, you need to know there is real money to be made. Unfortunately most investors make a lot of mistakes in this trade thereby failing to get maximum returns on their investments. Here are the top five buy-to-let mistakes to avoid:
Failure to Have a Proper Strategy
Joining the buy-to-let industry should be seen exactly the same as starting up any other business. Many beginners will start off without a well-defined idea of their goals as well as the plan they are going to take on. You need to create a business plan that states the purpose of your investment, your exit strategy, the type of homes you are going to acquire as well as the number of properties you wish to own.
Poor Property Choice
Understand that not every area or property will be ideal for this kind of investment. So try to explore; find out the areas where rental demand is high and the anticipated rents on the type of property you wish to acquire. Also, understand that you are purchasing the property to let out not to occupy. Sometimes beginners purchase based on their tastes instead of considering this as an investment. The risk is that you may end up paying more for the property and find it hard to maintain. Talk to your local agents to help you find properties needing renovation which sell BMV (below market value). These are a great choice because once improved their values or possible rental incomes shoot upward.
Failure to Work Out the Sums and Monitor the Cash Flow
Do not presume that if the rent covers any loan then everything will work out perfectly. You should sit down and work out the actual cost of your investment before you buy to have a clearer picture of your return on investment. Calculate the real cost of purchasing including all other hidden ongoing charges and monitor the cash flow once you purchase.
Failure to Vet Occupants
It is important that you be aware of your tenants’ previous rental history, credit reputation and employment. You could work with a letting agent to ascertain this. Also, you need to have an opinion regarding each renter on whether or not they will take care of your property while occupying it. Ask them about their lifestyle and make yourself clear on the issue of companion animals (pets).
Failure to Understand Legal Issues
There are certain legal requirements which you must comply with failure to which you could face serious consequences. Ensure that you are aware of the safety standards, handling of tenants during eviction, tax matters and many other obligations. You could work with a legal expert to ensure you are on the safe side.
If you avoid the above blunders, you will make the most money out of buy-to-let. You could buy neglected homes BMV (below market value), improve them through renovation and charge higher rent