Due to many recent events, mainly the fact that interest rates are at an all time low, many people are finding that investing in property, specifically buy-to-let, is an intriguing prospect. When investing in property, the hope is that the property will go up in value, meaning that you will be able to collect a very handsome monthly income from tenants.
While that sounds like an incredibly tempting prospect, be careful not to get too excited as becoming a landlord isn’t a get-rich quick scheme which will bring in plenty of extra income. Aside from any mortgage payments, letting a property comes with a variety of additional costs, some of which can be a substantial drain on your current funds. If you’re not a fan of surprises or shocks, it’s best to understand the kind of costs you’ll be looking at so that you can make an informed and wise decision.
So what kind of costs are you looking at? Well, let’s take a look.
As a top letting agency in Birmingham, we feel we’re experts in this particular section. The usual charges from agents tend to be between 10 and 15% of the rent, depending on how comprehensive their service is. However, this is service is essential to your property as letting agents will promote and advertise your property for any potential tenants. They will also record an inventory, show potential tenants around the property, source references and draw up a tenancy agreement. An agency may also collect rent on your behalf and chase any arrears that are owed. In short, a letting agency will take a lot of the hassle off your hands.
By law you’re required to keep your property in good repair, which means covering things such as: drains, any appliances that you put in, pipes, boilers, gas, electricity and heating. However, you’re not responsible for anything the tenant brings with them, or replacing anything they have broken or damaged. You want to keep on top of maintenance to ensure your property remains in a good state and that your tenants are happy.
Buildings insurance is a must for any homeowner. Typically, such insurance covers your property against such things like flooding, fires, storms and any natural disasters. When looking to take out a mortgage, most companies will insist on proof of buildings insurance.
You can also look into specialist landlord insurance! Don’t know what that is? Well, here’s an indepth guide.
If you decide to furnish your property, you might also want to look at getting contents insurance as this will cover your furnishings as well.
So hopefully now you feel a bit more informed when it comes to looking at buying to rent property. Of course, if you’re past the planning stage and are ready to start looking at properties, we can help! Contact us today on 0121 212 0122 and find out exactly what we can do for you.