Research your market
This is the most crucial element before you start investing. What can you afford? Are you looking for capital growth or income? What investments are being made into the area? Is there a big hospital, how many companies are operating in the area, what public transport is there? What is the access to the motorway like? What will your money buy in the area? Is it an article 4 area?
Choose a promising area to invest
This does not mean the most expensive or the cheapest. It’s an area where lots of people would like to live. Where in your town has a special appeal? Where has good transport links? Where are the good schools for young families? Where do the students want to live? You need to match the kind of property you can afford with locations that people who would want to live in. This may not be where you live yourself as the market price may be too high there.
Do the Sums
Sit down and write down the cost of property you are looking at and the rent you are likely to receive.Buy-to-let lenders typically want rent to cover 125% of the mortgage repayments - often now 150% - and most now demand 25% deposits, or even larger, for rates considerably above residential mortgage deals. The best rate buy-to-let mortgages also come with large arrangement fees. Once you have the mortgage rate and likely rent sorted then you must be clinical in deciding whether your investment work out? Don't forget to factor in maintenance costs. What will happen if the property sits empty for a month or two? Don’t be emotional, if the figures don’t work, move on!
Choose your power team
Having a great team working with you is vital to your success. You will need a:
Solicitor
Mortgage Broker
Tradesmen
Builders
Project manager
Letting Agent
You may choose to work with a company that will source the property for you and manage all aspects of the project, offering what is known as a turnkey service. Work out the cost of your time doing it all yourself and the downside /upside of working with a company such as this. They will know the area well and should already have a power team in place saving you time and many headaches.
What model have you chosen
Who is your target tenant?Are you looking to let to students, professionals, Social Housing? Multi lets? Why?What is the upside/downside of each model? Have you done your research into each sector?What does investing with these markets entail? Is your goal cash flow or growth?
Don’t be over ambitious
Cash is King, or Queen!Work out your numbers. Make sure the properties cash flow well to allow for bad days, tax, mortgage, bills. Decide on the yield you will be happy with and stick to it. What is the acceptable return you can work with on your investment?
Stick to your model
Don’t jump from one model to another, stick to your chosen model and make it work. Once you have your target number of properties or desired cash generated per month then consider another investment model to run alongside this one and maybe spend 40% of your time on the established model and 60% on your new one. Rinse and repeat!