24 point checklist of a successful buy-to-let landlord

If you are contemplating investing in a buy-to-let property, there are some key areas you need to address to increase your chances of a successful outcome for your investment.

Decide your strategy

If you are considering investing in your first buy-to-let property then you will need to decide your investment goals and the strategy you are going to adopt. A business plan needs to be created, well ahead of your initial investment, covering the following areas:

• 1 - How much money are you going to invest, and will you purchase the property with cash or will you require a mortgage?
• 2 - What is the purpose of the investment, do you want to create a monthly income, capital appreciation, or both?
• 3 - How many properties do you want in your portfolio, are you looking to build a portfolio of properties or just stick with one?
• 4 - What type of property are you going to choose for your investment (houses, apartments, student lets, or even commercial properties)?
• 5 - How long do you intend to keep your buy-to-let properties as an investment?

Do your research

• 6 - The motto 'never invest in something you don't understand' is never truer than with buy-to-let. Research, research, and then do more research.
• 7 - Understand the properties and the locations that will give you the best yields on your investment.
• 8 - Understand that a buy-to-let property is an illiquid investment and the problems that may occur if you need to realise your investment quickly.
• 9 - If you know somebody who has invested in buy-to-let properties then talk to them about their experiences good and bad.

Choosing the right property

• 10 - Do want a property ready to let or are you prepared to do some work in bringing a property up to rental standard?
• 11 - Do you want to invest close to your home or are you prepared to look elsewhere for the best potential yield?
• 12 - Talk to estate agents about the best properties to buy form their point of view and local knowledge.
• 13 - Always buy a property on the basis of rental yield not on the basis of whether you would live in it yourself.

Investment management

• 14 - Will you manage the property yourself or are you going to use the services of a letting agent?
• 15 - If you use a letting agent, will they manage everything or just the job of finding a tenant and do you know the costs involved?
• 16 - If you are managing the property yourself, do you have a maintenance person or company who can deal with any emergency call-outs?

Do your sums

• 17 - Understand the income tax implications on rental income.
• 18 - Understand the Capital Gains Tax implications when selling a property that is not your primary residence
• 19 - Understand the full cost of buying such as stamp duty, solicitor fees, and any mortgage fees prior to making your first purchase.
• 20 - Understand the ongoing costs such as mortgage payments, insurance costs, maintenance costs, letting agent fees and potential void periods.

Understand the legal issues

• 21 - There are legal responsibilities that a landlord must adhere to with serious consequences if ignored.
• 22 - Any income or profits from buy-to-let are taxable, so read this article for more - "Guide to income tax from a rental property".

Shop around for the best mortgage

• 23 - If you are requiring a mortgage to purchase your buy-to-let property, shop around to get the best deal.
• 24 - You could source the best deal yourself or employ the services and knowledge of a professional mortgage adviser* or use an online mortgage specialist such as Habito*.

 

If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses - Habito