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Seven Rules Of Property Rentals

Mar 12, 2008
If you're looking for a more balanced way to save for your future than just lumping money into a pension scheme, maybe you should consider property rentals.

It's only been just over ten years since the first buy-to-let mortgage was introduced into the UK. But now more than one million households live in a rented property. That means five to six per cent of all homes in this country.

And it's estimated that between now and 2018, up to another 30,000 homes will be bought and turned into property rentals.

If you're thinking of becoming an investor in this way, here are seven rules you should ignore at your peril (see also http://www.propertytoday.co.uk/Seven-rules-of-property-rentals.11018.3829839.story ):

1)Research carefully: This means checking whether or not it is right for you to even get into property rentals in the first place. Look into every aspect of buying a home and renting it out. It's not for the faint of heart, and will take up a great deal of your time, and maybe even money. Don't rush this stage. It's not the kind of investment that you can back out of easily.

2)Be careful with your money: You don't need a huge amount to get started with property rentals. A few thousand will give you the initial deposit you need to buy a house and you can borrow the rest. A lot of amateur landlords have built up a pretty impressive portfolio in this way. But you should be tight with your cash. Don't spend a single pound unless you have to. That means ensuring the infrastructure of the property is sound, but leaving the décor until it absolutely needs to be fixed.

3)Get the right mortgage: Unlike ten years ago there are now hundreds of companies that will lend you the money you need. Some will require up to a quarter of the purchase price as a deposit, so check the figures carefully. Compare interest rates and watch out for any penalties. There are many specialist advisors who will help you find the perfect loan.

4)Get the right property: You have to strike a balance between what you can afford and the revenue you'll get from property rentals. Decide which market you want to rent property to - maybe professional couples, perhaps growing families on a budget - then give them what they want. Homes to rent are pretty price sensitive, so you need to know what the demand is before you go buying.

5)Get the right tenant: Once you've got the property, get it earning you money! If you got the last step right you'll find this pretty easy. Always keeping the target audience in mind is key to success in property rentals.

6)Keep your house full: The only way to make real money from your investment is to ensure you always have a tenant. Keep the decoration in your property neutral, meaning it will appeal to as many people as possible. It may even be worth working with a property agent who will maintain lists of people looking for somewhere to live.

7)Grow your portfolio: Once you've worked out how to do it with one, scale it up. Take care, move cautiously, and learn from the tough lessons you've already been through. You can borrow against the assets you have in one property to raise money for your next project. This is how professional investors do it. You may end up with one hell of a mortgage, but you'll also have an impressive portfolio that, if you get it right, could ultimately give you a significant income in old age. Don't forget to get professional advice.
About the Author
Additional information about property rentals can be found at the Property Today website.
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