PROPERTYSPARK ARTICLE

Essential Things To Get Right With Your First Buy To Let Property

Demand for rental properties is high which is what makes the buy to let industry a profitable one. 36% of Americans currently rent their homes and the typical monthly rental fee is $2,000, according to The Guardian. With figures like this, it’s clear to see why so many people are interested in buying to let. But as a novice, you must ensure you get these things right so that the money keeps rolling in.

Buy in the right area

When looking for a buy to let property, consider the local rental market. Renting is much more common in some states, cities, and towns than in others. For example, Newark in New Jersey is currently the largest rental city in the US. You also need to make sure that the property meets most tenants’ expectations. Ideally, it should have parking, be in a safe and secure area, and be local to a school. After covering these things, you can apply for a buy to let mortgage. Don’t worry if you have credit issues as getting a buy to let mortgage with bad credit is possible. A higher deposit may be necessary and the interest rate you pay will be above average. It’s advisable to use a broker in this circumstance as they’ll help you apply and find the ideal lender for your buy to let mortgage. Just make sure that the monthly amount you pay can easily be covered by the rental amount you plan on charging your tenants.

Carry out checks

Now that you’ve secured a property, the next thing to do is find good tenants. Good tenants are worth their weight in gold and you should always run thorough background checks to ensure any potential tenant is a good candidate. Studies have found that 16% of landlords don’t run criminal background checks, while more than 10% don’t check their tenant’s credit history. By doing these things you can be sure that your investment property is in good hands. A tenant with a good credit history is likely to keep on top of their rent and pay on time too, so this is an essential check to carry out.

Who’s paying what

All rental agreements on any buy to let property should come with a signed contract. This should also detail who’s responsible for paying for things such as utilities. Remember, if you decide to pay for utilities, you’ll also have to deal with any issues that arise. This could include tackling a problem with the internet connection or sorting out a gas leak. Whichever option you choose, always protect yourself, your property, and your tenants with a utilities clause, heat and water clause, and a lessee to maintain clause. The latter is particularly important as it covers you in the event of the misuse or neglect of utilities by your tenants.  

You’re sure to want as much money as possible from your first buy to let property. To do this, you must be on the ball and focus on the three areas mentioned above.