Buying-to-let: a beginners’ guide

Published on 13 April 2016

Building an asset while collecting a supplement to your income and paying less tax : such is the challenge of rental investment. Buying to let is becoming increasingly attractive thanks to several tax exemptions.

The idea behind buying-to-let is to acquire a property, then to let it out for a monthly rent. It’s unsurprisingly a very popular choice for people looking to invest, because its long term performance is rarely matched by other types of investment. In addition to its profitability, rental investment has the benefit of being characteristically safe: because it is relatively unaffected by economic conditions or crashes, it is rarely subject to a loss of value. 

What are your objectives ?

The first step before engaging in a real estate investment programme is to define your objectives. They could be of several different natures: generating a supplementary income, making capital gains upon resale of a property, building an asset base, passing the property on, or even transforming it into a secondary residence after many years. Having a precise objective allows you to make decisions knowingly, and can help you navigate your way through a complex market.

How do you choose a property ?

Whatever the objective, it is essential to ensure that the property’s vacancy rate is minimal. In other words, it must be easy for you to find a tenant. In order to do this, you need to choose a property that meets the most current research criteria. Most experts agree that the most important factor is location; a close proximity to public transport and shopping is essential. Equally important is knowing your tenant profile. For instance, if you wish to let a house with several rooms and a garden, you should probably look for a family. In this case, close proximity to schools, parks and sport facilities is crucial. If, on the other hand, you wish to let a studio, this could interest student tenants. In this case, you should focus on town centres close to universities.

As well as location, you need to consider the quality of a property’s construction, including its insulation soundproofing. Think about choosing a property as if you’d be living there yourself. Get a feel for the rental market in your area of interest by looking at rental ads. This will give you a realistic idea of what to expect in terms of rent prices.

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