Top Tips for People Looking to Become Landlords

By | May 26, 2015

The rental market is booming at the moment and demand is high. That can only be a good thing for potential landlords like you. Here are some top tips if you’re looking to invest in property soon.

Research the Market and Location Thoroughly

It’s never a good idea to make an investment until you’re fully prepared and have done all the necessary research. This same logic applies to property investment too. You need to research the local housing market and the location in which you’re buying thoroughly before making a purchase.

If you’re investing in an unfamiliar area and you don’t know it well, it’s useful to get advice from a local estate agent who knows what they’re talking about. Far too many new landlords take an arrogant approach to the property market and assume they know best, but that’s often not the case.

Visualize Your Target Tenants

When you’re buying a property to rent out, you need to think about the needs of your target customer. It’s them who’ll be living in the property not you. So, you need to leave your personal property prejudices at the door when you’re viewing properties and try to look at them objectively.

For example, young professionals probably won’t want to rent new town homes in the suburbs. And families probably won’t be keen on inner city apartments. It’s just a case of using your common sense and making sure the tenant and the property match.

Plan Your Spending Carefully

Before you dip into the market, you should think carefully about how much you can afford to spend. As we’ll discuss in more detail below, your returns won’t be instant so it’s important not to spend more than you can afford on a property. Sit down with a calculator and work out how much it’s going to cost you in total.

There are all kinds of costs involved in buying a property, but those costs are even greater when you’re buying to let. For a start, buy to let mortgages require a larger down payment than those for ordinary house buyers. The interest rates tend to be a little more too, and then there’s landlord insurance to pay for.

Be Aware of the Limits on Your Returns

Renting out property and becoming a landlord isn’t for those of you who are looking to make a fast buck. It’s a long-term kind of investment, so you have to be patient. If you rent out the properties for long enough (and if you have lots of properties), you’ll eventually see a good return on your investment.

But what does it mean for your finances in the short-term? This depends on how much you spend on the property and how much you can charge in rent. But the recommended rent price is 1% of the amount you paid for the property per month. So, if you paid $400,000 for a property, you should be looking to get $4,000 back in rent each month.
There’s a lot of money to be made in the rental market at the moment. But that doesn’t mean it’s easy, so act professionally and employ these tips!