Buying properties to let them out has been an incredibly popular type of business in recent years. Starting a rental property empire isn’t easy, but it can be done if you go about it in the right way with the following steps.
Crunch the Numbers
At its simplest, rental property investment is about making sure that the rental income you receive pays the mortgage and other expenses while the property grows in value. This means that there are a few different numbers you need to stack up before you can go ahead.
For a start, you need to be able to borrow enough to buy a property. This property needs to be valuable enough in terms of rental income that you can cover the outgoings comfortably. Finally, there has to be a prospect of its value increasing enough to give you a handsome return at some point in the future.
The exact numbers will be revealed as you go through the next steps. You can get going by getting some expert mortgage advice on the amount that you can borrow. You can do this using something like Trussle’s online calculator, to help you to narrow down your options and compare offers from different lenders before getting an agreement in principle.
Find the Best Areas
With an idea of your budget in mind, it is now time to think about where you want to buy a house. Since getting good rental income is a key part of the overall plan, it needs to be in an area with a good rental market.
The property yield is an important figure to research, as this shows you how much of a return on your investment you are likely to get on a property. Central Liverpool postcodes have been leading the way in the UK lately, with up to 10% yields.
Looking for areas with a lot of students or that attract young workers from other parts of the country is a good move. However, if you want to deal with luxury property rentals or target any other sort of specific market then the starting point is with finding the right place to do it.
Look for the Right Property
By this stage, you should now be pretty clear on the type of property you are after, its value and how much it needs to be worth in rental income. Armed with this valuable information, you can now search for a suitable property in the area you are interested in.
If you have the time and DIY skills to refurbish a house on a small budget this will increase your chances of a healthy profit. Just remember to work out a realistic valuation in terms of how much it could cost you to do this to a high standard.
By carrying out each of these points well, you will be giving yourself a great chance of building up a profitable, long term property business. If the first property is a success there is nothing to stop you from doing the whole thing over again for more houses.