Buy to Let Basics
Buy to let’s are the bottom of the investment pyramid. They form a solid foundation from which you build to bigger (and possibly more exciting things! Despite what you may have read buy to let investing is not dead in the UK, and there are lots of great deals out there and good to be done. Yes, good!
Contrary to popular opinion, not everyone aspires to own their own home… and with less social housing than ever good landlords are gold dust.
If you want to get into buy to let investing you can either buy a property that doesn’t need doing up or you can do what I have done which is to buy grotty houses that require renovation and refurbishment to bring them up to market value. I then refinance these properties to market value after 6-12months in order to pull out money to buy again. Here are my tips:
Buy to demand!! Check there is demand in the area you are buying before you buy!
Do your due diligence…check sold comparables within 1/4 mile and sold in the last few months on rightmove, then use hometrack to estimate end value, cross check values on zoopla and mouseprice. Check, check and double check your numbers.
Get a survey before buying … it helps to avoid surprises (although not always!!)
Be ethical - don’t gazump people when they have offered on repo’s and don’t kick tenants out of their houses … there’s abundance out there and to me it’s just good karma!
Don’t be over optimistic on what value you will achieve … plan for a worst case, min case and best case!
Get a few quotes from builders on what work will be needed. Dont necessarily go with the cheapest quote. Choose your builder wisely, get a few recommendations, check them out on line and finally go with who you think you will work best with (despite doing this I have still been caught out a few times). A builder will make or break your deal.
Surveyors have all the power. If they are having a bad day, they will give you a lower valuation and there is not much you can do about it!
Prepare revaluation pack showing the surveyor what works have been done and what you think the end value is… pass to surveyor and back away meekly!
Consider getting two valuations done at the same time, then if one doesn’t come in as expected you have a fall back.
Get the right tenant in… make sure you are comfortable with who the letting agent chooses.
Be nice to your tenant! You are providing a home for them. Change your mindset - these are not your properties. They are other peoples homes! I want my tenants to stay forever. So far so good! I attend to problems quickly and efficiently. Tenants can have pets, smoke and put up pictures, they can also decorate - because it is their home!
Know the legalities of letting - you are responsible for tons! Go and become an NLA accredited landlord.
Get an amazing accountant - they can help you decide to buy in your own name or a company. I have done both.
You don’t need loads of money to get started in property! Look for houses around £50k… my broker even found mortgages the other day for properties around £35k! At 75% LTV you only need 25% for the deposit and a bit extra for fees!
Go for 75% LTV so you leave some equity in…
Get an amazing power team!
Have a spreadsheet - run your numbers and take into account all costs of buying. Then stress test your purchase on what happens if mortgages raise to 6% - I never buy properties that don’t cashflow over £100 on a 6% stress test.
Be prepared when letting to dss tenants that payments from the council or universal credit take time to come through… don’t start evicting good tenants because the government is not paying correctly or on time. I have waited a long long time for payments to come through and have had some very upset (wonderful) tenants worrying I would kick them out…
Balance your portfolio - I dont like to buy in only one post code or area, I also balance tenant types to protect cash flow.
What’s your strategy? Do you have any tips for buy to let investing? I’d love to know! Drop me a comment below…
Ana ♡
Want to connect? Find me on insta @dr.anaattlee, or why not pop along to a meet up? If you think I can accelerate your journey to your goals get in touch or book a coaching session!