Buy to let tips

It found these clients do not feel they can find a suitable property and are not confident of their knowledge of this market.

Lee Grandin, managing director of Landlord Mortgages, commented: “Buy to let investment is similar to any other type of investment in that you need a certain degree of knowledge to succeed.

“With this in mind, we have put together a list of pitfalls that many novice investors struggle to avoid. We really hope that these tips prove useful and encourage investors to make smart choices when they decide to invest in property.”

The tips include:

1. Do not underestimate the amount of time it takes to own a buy to let property – Owning a property creates a great deal more work than simply owning a ISA. Do you honestly have the time? Will you have time in the future? Make sure that you understand the demands this type of investment will place on your life.

2. Do plenty of research – Before you start looking at properties, you should have a good idea of how much you can afford, where you want to buy, what you want to buy and what tenants you intend to target. Make sure you have researched this thoroughly before even speaking to an agent.

3. Take your time – Buying a residential property is generally very costly so make sure that you take enough time to find the right property in the right area for the right price.

4. Do not be too trusting – An agent or vendor is ultimately only really interested in selling you a property and generally will not care if you cannot rent it out or sell it so only trust your own research.

5. Do not be afraid to ask ‘stupid questions’ – At the end of the day, you are liable for the financing of the property so make sure that you understand exactly what you are being told.

6. Do not go over your budget – Before you decided to buy an investment property, you should know exactly how much money you have to spend. Stick to it as the objective of buy-to-let is to make money not to cause yourself financial hardship.

7. Be wary of off plan investment – Some developments are genuinely good investments but those marketed at investors often suffer from investor flooding*, overly high valuations and can be more difficult to finance.

8. Ignore the decor when looking at property – It is very easy to discount a house if you don’t like the wallpaper or carpet but remember these can be replaced and you may be walking away from an ideal property.

9. Speak to a tax adviser – In a rising market, high capital gains tax charges can be a huge problem for landlords so speak to an expert who will give you ideas on how to minimise your liability.