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Soaring Hopes for Buy to Let Property Investment

Most investors are veering round to the view of owning rental real estate as a way of building wealth particularly after experiencing the vagaries of the stock market with its stresses and strains. There are also those who aspire for a second home so that they can develop an appreciating capital asset with rental income.

Finding the right rental property usually takes time, connections and plenty of research and it is not meant for those who get frustrated soon. Investors find to-let properties in multiple ways - searching for foreclosures, making friends with city hall clerks or bank employees who know which properties are coming up for sale, advertising in local newspapers, working closely with real estate agents who actively watch out for possible buys. Several landlords suggest joining a local landlord or property owner's association to make contacts. Yet another idea is to approach landlords directly to see if they are willing to sell, by contacting the numbers listed on rental ads in the classifieds, or by talking to any landlords you know personally.

People wanting to invest in to-let property must keep their personal finances in good shape. Market analysts say that lenders usually expect bigger down payments, higher interest rates and good credit rating from people buying rental property. This is because they feel people are more likely to default on to-let property than they are on their own homes.

Investors must bear in mind that rents and property values can fall as well as rise and there will be no rental revenue during periods of non-occupancy. You should therefore make sure you have other savings to fall back up on before investing in rental real estate and not allow yourself to be entirely exposed to the whims of the local real estate market. What is critically important is to make sure your rental income fully meets your overall costs that include the mortgage payment on the property, taxes, insurance, maintenance, repairs and a non-occupancy rate of around 5%.

To more accurately estimate your costs, get a thorough inspection done before you buy a to-let property. Some landlords have reliable electricians, plumbers and contractors that they send to inspect any prospective property while others use professional inspectors they trust. Longtime landlords say all expenses get paid off in profitable properties and they are able to build their net worth while enjoying a steady rental income.

You should also be clear in your mind about your target customer. If you are keen on the higher end of the market it can certainly mean fewer rental problems. But these clients may be more demanding in terms of furnishings, additional amenities etc.

Try not to fall in love with a property and get emotionally attached. It is then not easy to see the property as a business proposition and you will end up indiscriminately buying a property that may not fetch any meaningful rental revenue. Many owners prefer the convenience of employing a local rental agent, unless you live near the area where the property is located and want to avoid paying broker commission. Look for a rental specific agent, one that preferably does not sell property as otherwise he will not bestow enough attention to your needs.