Landlord & Buy To Let Costings Explained. Use The Equity In One Property On Another. Optimise Your Mortgage Portfolio By Remortgaging. Multiple Landlord Mortgages - Purchase Or Remortgage.
Many people consider purchasing a second property as a long term investment, by becoming a landlord and renting out a property to a tenant. When looking at purchasing a buy to let property it is important to consider all the costs that are involved in being a landlord weighed up against the possible revenue from your rental property. It is not all about taking the rent in, that covering the mortgage and waiting to turn a tidy profit. You have to
1. Find a decent rent-able property in an area with plenty of opportunity.
2. Obtain a mortgage at a good enough deal to be (hopefully) paid by the rent.
3. Maintain the property for the tenant and be prepared to cover landlord maintenance costs.
4. Watch the market closely and react accordingly - as property prices can go up and down.
Purchase Of The Property
The biggest cost for any landlord is often the initial purchase of the property, in most cases you will get a mortgage to buy the property, the interest charged on your mortgage must be factored into your calculations. Try to put together the biggest deposit you can, allowing for money you may need for initial reparations / maintenance. You should also consider the revenue from the rental, will this cover the mortgage, of not how will you cover the shortfall?
You may also see the price of your property increase over time. It is important to consider that you may not always have a tenant for the property also house prices can go up as well as down, in reality landlord investing is a form of gambling and many people got quite a shock in 2008 when the property market wheels feel off. Here at First Choice Finance we do not give investment advice, for this you need to speak to your financial adviser. However we have been arranging landlord / buy to let mortgages for around 25 years so maybe we could help you find a top buy to let mortgage for your scenario from our mortgage loan lender panel. We specialise in providing no obligation buy to let mortgage solutions and start by offering a free personalised quotation where we can help, call our Uk landlord mortgage team on 0800 298 3000 or 0333 003 1505 (mobile friendly).
Property Insurance / Landlord Insurance
When renting out a property you need more than just residential home insurance and building insurance, you will require specialist landlord insurance that can be slightly more costly. But can cover aspects such as rental cover should the property be empty for a period.
Certificates & Safety Checks
Rental properties require a number of safety checks and certificates before being allowed to be let, these include your energy performance certificate, gas safety certificate and a working smoke detection alarm. Some of these will be met during the purchase and mortgage process but you may need work carrying out to meet rental standards. There is also the cosmetic factor, you may get a premium rent by spending some time and money improving the aesthetics of your buy to let property.
Tenant Acquisition & Management
Once your property is ready to rent out, you will need probably to pay for advertising to find prospective tenants, once you have a tenant in your property you are obliged to ensure the property is in good condition and you will be liable to pay for any repairs to keep the property up to standard. In some cases you may consider using a rental agency these will manage your properties and help find new tenants but they will charge a fee to look after your property.
As with most income your rent will be taxable the amount that will be payable will depend on how much you earn and your individual circumstances, your tax liability should be reviewed before purchasing a new property to rent. We do not do tax calculations and you should speak to a relevantly qualified accountant to help you get this area right and set aside finds ready to meet your tax liabilities on time.
Legal & Administration Costs
When renting a property it is important all the legalities are covered, it is important you have an appropriate tenancy agreement, you may also find the need from time to time to pursue missed rent or tenants damaging the property and arguing about their liability wanting their security deposit returned. A solicitor can help you set this up if you have not done one before. Again keep an eye on regulatory changes that may alter the rights of you or the tenants - or may mean you need to do some work to the property.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Security is required on
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