Buy to Let Building Insurance

A buy-to-let mortgage is a form of investment which can offer more security than the less predictable stock market. It comes with no guarantees, but as the nation gets more in debt and standard mortgage applications are being turned down, people are looking more at renting properties as opposed to climbing the property ladder themselves.

If you are in a fairly stable financial position, you could capitalise on this by looking at buy-to-let mortgages. Do a little research first and seek out others who have had them to hear their views. If the response is positive, take a look around your area. This will help you realise your target audience, and in turn the type of property to go for.

Are there schools, supermarkets, quiet roads? Perhaps a 3 bedroom semi-detached with a garden for a family would be a good idea. Flats located near a business park will attract young professionals. Students will flock to a house near a university. Try looking a little further afield too, you don’t have to restrict yourself to your own area. Just make sure you’re close enough to visit the property on a fairly regular basis to keep an eye on things.

Once you’ve decided on a tenant base, start making enquiries about mortgages and house prices in the area of your choice. There are specialist buy-to-let mortgage brokers who will help you select the right mortgage and advise you every step of the way. Most BTL mortgages will only cover 80% of the property value, so you’ll need a sizeable deposit. You’ll also need to find out the average rent prices in your area and make sure that they will cover the repayments plus money for repairs, taxes and any other costs that will arise.

All mortgages have pitfalls, and a BTL mortgage is no exception. You may have dry periods where the property is empty, or you may find it needs some major repairs doing; you’ll need to prepare for any contingencies and add the cost to your rent.

If you don’t feel that you could cover all these costs with a reasonable rent for your area, then don’t invest just yet. Keep an eye on house prices and consider the possibility for the future instead.

But to let, or buying a property then letting it out, has been a popular option for many would be entrepreneurs over the past 10 years or so. The buoyant housing market has allowed many people to buy a house, then use the rent on it to pay off the mortgage while the capital investment increased as the overall UK economy grew. Due to the fact that the economy has been in good shape over the past 15 years, banks were offering 125% mortgages at very attractive rates. However, as the housing market has slowed, so has the buy to let frenzy, as a potential investment for a lot of people. As liquidity in the banking system has seized up, the number of specialist buy to let mortgages available has declined to virtually zero today.

The buy to let market in the UK has grown hugely over the last 10 years, however things do not always go to plan. It may be difficult to find any tenants, or replace tenants who have left. Maybe the latest rise in interest rates has made buy to let unprofitable?

If you can’t let your property or the rent doesn’t now cover the mortgage, your property is costing you money and you’ll want a quick sale – this is where house buying companies can help.

How can house buyers help?

House buyers will purchase your house for cash, quickly – often within 7 days.

By selling your property direct to a house buying company, you avoid the possible lengthy delays, and associated costs, of selling on the open market.

How does it work?

It’s simple.

1. The house buyer will arrange for 3 agents to value your property.
2. They will then be able to make an offer to you based on these valuations.
3. On accepting our offer, they will agree a suitable date for exchange of contracts and completion.

There is no cost or obligation in receiving an offer.

What are the benefits of using a house buying company?

• You guarantee the cash sale of your buy to let property.
• You avoid potential lengthy sale processes.
• You can pay off your mortgage quickly and stop your buy to let property becoming a financial drain.

When purchasing a buy to let property as an investment, the main consideration should be where to invest. Bargain properties come up in all sorts of towns and cities, depending on their state and proximity to amenities. Purchasing a buy to let property because it is cheap does not necessarily herald a wise investment.

Always, always research the area you are interested in. Look into the local amenities. Are there good, local schools and colleges that carry good reputations? Particularly if you are looking at a buy to let property that is suitable for a family, you need to consider the local area from the perspective of children.

Open areas of parkland or greenery are always a bonus for families as well as the good schools. Ensure there are suitable choices for doctors and dentists, maybe if you think you would let to working parents, check out childcare facilities. These are all time consuming searches but make a worthwhile advertising tool for your buy to let property.

It won’t be too difficult to search the area around your buy to let property for signs of re-generation. Run down areas will offer up cheap houses but check out planning permission listings. Building sites are never pretty but it will show that money is being ploughed into the area, giving hints about what is expected for the areas future.

Culture issues are an important attraction if you are targeting a particular market. Look for theatres, cinemas, clubs, groups, exhibition centres and the like. All these will make your buy to let property an attractive option.

Decent shopping centres are essential for all groups of people. Choice is something that most people are demanding these days and small local shops as well as large, glossy department stores and shopping centres are the order of the day.

For the smaller buy to let property where you might target the single person, look for homes that are just outside of a large town but on a commuter line. The rents will be more affordable than in town so more attractive to workers.

When carrying out your research on the local area, don’t omit to check out average local rents on similar size properties. You need to be competitive and not overprice yourself or appear too cheap, as this will attract the wrong type of tenant.

When considering the rent you intend to charge, take into account ALL of your outgoings. Not just mortgage rates but allowances for fluctuations in mortgage rates. Also consider any taxes and insurances on the property.

It is essential to make sure there are enough funds to not only get the property into a letable state but to uphold the maintenance that you will be liable for. To reduce any risk of the property falling into bad disrepair, it is a good idea to employ an agent to look after the property, particularly if you are not living near enough to keep a regular check on it.

It is always a good idea to leave yourself with a contingency fund. Set aside enough money for the possibility of the property sitting empty for two months of the year. This will cover any blips in rent and give you some breathing space.

Buy to let properties can be a good investment but not for the first timer without advice. Always seek advice from seasoned landlords and research and know your area and target tenants.

If you read the title of this article and thought to yourself, “Let what? What am I letting happen buy buying? And what am I buying?”, than this article is definitely for you. First let me establish that the “buy” refers to a house and second, the “let” part, that refers to renting that house out to someone else. Basically it means that you buy a house and let someone else pay the mortgage and live in it. There are, as with everything, some really good aspects of this kind of arrangement, and some really bad ones as well. This is not an agreement to enter into frivolously for if you do, you very well may regret it for the duration of your mortgage.

Basics of the Buy To Let Agreement

Buying to let, or buying to rent, simply involves a person finding a house, signing for a loan, and then immediately renting it out to someone else. The house is in the buyer’s name, but then it is contractually signed over in a rental or lease agreement to a tenant.

Why Would I Want To Do This?

This is a great way to generate some extra cash flow, buy a house to later sell for profit, or buy a house to later dwell in yourself.

Extra Cash Flow

When you make the purchase of a house in order to rent it out to someone you go through the loan process just like with any other house. Once you have established the mortgage payments that you will owe every month you then can set the rent price. The rent price is set by you and can be whatever you want it to be. If you are paying $500 per month and want to rent for $800, you are making $300 profit every month. You can set the price of rent to whatever you think that the market will bear.

Buying For Selling

You can get an interest only loan, the kind of loan that typically has the lowest payments for the first few years, and buy yourself a house to rent. Assuming that instead of those $500 payments per month, and now your mortgage is only $400, but you are still charging $800, you will have a lot of money to put back into the house each month. You can, instead of spending or saving the profit from the renters for personal use, put it right back into the house in the form of repairs and upgrades. The renters think that they are getting a good deal because you are constantly doing good things to the house that they live in. You will be thankful and grateful to the renters because they will be paying for your mortgage and for the repairs that you are doing. After a few years you can sell the house at an inflated price cue to all the things you have done to it and you can make a lot of money on the deal.

Buying For Living

If you don’t have the money just yet to make the mortgage payments than perhaps you could consider renting your property out for a while until you can get to point where you can afford to live in it. Or, perhaps you want to buy a summer home but don’t have the means to do so. You can buy now and rent it out until you have the resources available to take on the extra mortgage payments yourself.

If it sounds too good to be true…..

Renting isn’t the wonderful, astonishingly simple way to make hordes of extra cash and become the next big real estate mogul. There are some negatives to it as well.

Landlords and other bad things

If you buy and rent out a house, you are the landlord. You have to make sure that the tenants are paying rent on time, you have to fix things that break or, if you can’t fix them, you have to pay to get someone to come out and fix them. You have to make sure that you have tenants that are not going to tear up the house and leave it is shambles when they leave, especially if you are renting in order to later sell for a profit. Any landlord will tell you that renting to good tenants is a great experience, but renting to bad tenants, nothing could be worse. If you don’t get tenants that will treat the property just as good or better than you will, than you will probably end up losing money on the deal.

What next?

If you feel like the role, or should I say, job, of a landlord is for you, than go out and start looking for someplace to buy. Make sure that you have a clear idea of what it is that you want to do with that property and get the loan that is most appropriate for your situation. If you don’t think that you will do well getting called to fix the roof, seal the plumbing, spray for termites, or any of the many other things that have to be done for a house, than maybe you ought to stay away from being a landlord. Perhaps the only thing worse than renting to bad tenants is renting from a bad landlord.