How did they fare? Well, there were success stories, but most of the people who went into the project with their eyes closed lost much money. There is a shortage of housing these days. You would think that buying to let is a no-brainer, but, as you will find out in a moment; sometimes it is not all it’s cracked up to be.
Financing The Property
Unless you are wealthy, you will need to take out a mortgage to buy a property. Twenty years ago banks were throwing money at people. Since the recession, they are strict with their lending policies. Here are a few of the obstacles you will face when trying to raise the money for your venture.
You must gather a deposit of twenty percent before the lenders will take your proposal seriously. That is a large sum of money now that house prices have undergone yet another hike in prices.
You must have a clean credit history. Any missed or late payments will remain on your files for six years in England.
You must be financially stable. The bank will look into all aspects of your financial life before coming to a decision on the mortgage.
You will need a solid business plan to show that the house will bring in enough in rent to cover the mortgage.
When you find the best property in an estate agents in Chafford Hundred, calculate the expected income from renting it out. Most owners work on the figure of about one hundred and twenty-five percent of the monthly mortgage payments. You must take into consideration the location of the property too. In a run down area, it may not be able to generate the income you need. Interest price rises will affect you because you cannot increase the rent in line with them. If they rise, the mortgage could end up higher than the rent.
You never know how people are going to treat your property until they live there. People who look like fine upstanding citizens can prove to be careless and cause much damage to homes that they rent. Are you prepared for the repairs you have to do between tenants?
Don’t Overdo It
As tempting as it may seem to turn the house into a stylish palace, don’t. Provide the basic elements that people need to live only. If you install a posh kitchen or a luxurious bathroom, you may as well pour your money down the sink. Introduce commercial grade fixtures and fittings if you can. Laminate flooring will last much longer than carpet for about the same price, so it is an ideal material for you.
Well, I have painted a gloomy picture. It isn’t all bad; you may find long term tenants who are considerate and will look after your property. If you manage the project well, you can earn money every month and end up with a mortgage free house in the end. That sounds like a good deal to me.