Investing In Rental Property

Buy-to-let represents a tangible investment that is easily understood and is not subject to the unpredictable peaks and troughs of the stock market.

We can advise on choosing a property and whether it should be let furnished, partfurnished or unfurnished; the type of tenant it is likely to attract; the work that may be needed to meet legal requirements and the features that may enhance or detract from its rental value.

The regional rental market is generally quite stable but there are considerable variations from town to town and from street to street, which is where our advice is really important in choosing a property or predicting your likely income.

Choosing an investment property

A rental property is neither a liquid asset or an investment gamble. It is a medium- to longterm investment that should take account of capital appreciation as well as rental yields. It is very different to buying a home for yourself and if you are considering buy-to-let, do bear the following points in mind:

Style of property. The best choice may not be somewhere you would wish to live yourself. Look for something easy and cheap to maintain – high maintenance features such as timber cladding are best avoided and large gardens may well not appeal to busy professional tenants.

Location. This is an important factor in attracting tenants and in selling your property should you decide to do so. Tenants (and purchasers) will be looking for local facilities such as shops and schools, good transport links and, in most cases, a safe and troublefree neighbourhood.

Presentation. Having chosen a suitable property it is important to present it well. Any essential repairs must be completed and carpets, curtains and decorations should be in good condition. Neutral colours and plain carpets are infinitely preferable to bright colours and heavy patterns.

Furnishing. Even ‘unfurnished’ properties will usually have carpets, curtains or blinds, and white goods in the kitchen. Floor tiles or vinyl floorcoverings in kitchens and bathrooms will help tenants keep the property in a presentable condition. Avoid buying secondhand electrical goods – repairs or replacement are a nuisance, and you need to be sure they will meet statutory safety standards too. Similarly, furnished properties should be equipped to a good standard: second hand furniture and cast-offs may not meet safety regulations and will always be a turn-off for the better kind of tenant.

Don't be tempted to over-furnish. You are not expected to provide bedding or towels, and tenants may not want your ornaments or vases. Everything you provide has to meet fire and safety regulations and will have to be replaced if it wears out or breaks down since the property will have been let on the basis of the contents being available as part of the rent.

Finance. A buy-to-let property is a business and the factors that influence any other business will apply. Primarily, in order to
succeed, income must exceed expenditure. It is easy to over-estimate rental income while overlooking the true costs of purchase, maintenance and management, along with interest on any borrowing and the potential tax liability on any profits. Mortgage lenders will be looking for rental income that exceeds the interest on borrowing by at least 20% and you should apply the same principle to the capital you invest in order to see a worthwhile return.

If you have any specific questions do feel free to contact your local Cheffins property manager.