Buy To Let
Buy to let is becoming increasingly popular as an investment alternative to the traditional share options and bond savings accounts, particularly as the stock market is very uncertain at the moment and potential profits are lower than investors would like.
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Buy to let as an investment is not the same as investing in the traditional ways where you invest your money and wait for the returns, while you will have to make an up-front investment, there will be continuing costs with buy to let and if all goes well a regular income as well.
With a buy to let you need to be prepared for the costs involved, not only meeting the mortgage payments and the initial deposit, but there will also be maintenance costs, management and letting fees (if you choose to use a letting agent), service charges and if the property is lease hold there will also be ground rents. Depending on the condition of the property, you may also need to budget for redecoration and the provision of new fixtures and fittings – kitchens and bathrooms can have a big effect on the rental potential of a property and these can be expensive so be sure to take them into account.
Although there are a number of regular costs associated with but to let, when the property is occupied you will also have a regular income, which should be in the range of 130% - 150% of the monthly mortgage repayments. This will give you a clear profit each month, and provide the money needed to pay for the upkeep of the property when unoccupied – it is important that you take into account the empty periods that all properties face when making your calculations.
Keeping you buy to let property occupied is very important to the returns you will see on your investment, for this reason it is worth employing a specialised letting agent who will work to ensure that you have tenants for as much of the time as possible. The letting agent should have potential tenants on their books, and will be able to advise you on what level of finish and furnishing would be best for your property’s rental potential.
Buy to let is a good alternative to the more traditional forms of investments, and in the current economic climate can provide decent returns on the capital that you invest, there are a number of areas you should look into such as letting agents, buy to let mortgages and buy to let insurance.
If you are looking for a regular owner-occupier we recommend that you visit our sister site: UK Mortgage.
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