When you buy a first buy to let property, it can be easy to get it wrong. It’s important to remember that you make your money when you buy a property, not when you sell it. So try to buy right!
If you buy at the wrong price, it’s more or less impossible to rectify that going forwards unless a rising property market saves you and whilst we have seen that recently it is far from a certainty going forward (I am quite optimistic about the future as it happens but nothing is certain).
A landlord friend of mine bought a new build one bed flat ‘up North’ because that’s what everyone else seemed to be doing. He still owns it – mainly because no one is going to take it off him for the price he paid for it
If you buy wisely, you can also expect to sell wisely if you need to. So try to avoid:
Overpriced
Once you’ve established you can buy a nice two bed property in a given area for £X, don’t pay £X + £5,000 for one because you are impatient. If you overpay at the point of purchase, you’re playing “catch up” regarding the value of the property from day 1 …. So don’t overpay!
Buy What You Can Afford
Don’t over stretch yourself financially. What would happen if you don’t receive rent for a month or two? Okay we can insure you against that but what if the boiler goes and needs replacement? Always best not to be reliant on the rent. If you are stretched it can force you to sell at the wrong time in the property cycle – best avoided as you will often make a loss then.
Improvements Needed
Please don’t be put off by properties that need work, as these are often the best buys. I like property with a small problem or two as it puts off other potential buyers. But ensure this is reflected in the price. If it’s £X for a nice one, its £X minus £15,000 for one that needs a kitchen and bathroom.
Over Optimistic rental price
If you’re buying in an area where flats rent for £950pcm, don’t expect yours to rent for £1,050pcm on the basis that it’s just been painted – expect it to rent for £850pcm if you don’t paint it!
Missing key features
If you’re buying in a semi-detached family area to attract the family market, don’t buy the one house on the street that has no garden, or no parking. Families want gardens and adequate parking!
