Buy-to-let remains to be a big business for the UK’s small army of property investors. If you are considering reaping the benefits of a passive income from investing in a buy-to-let property in the UK, then you should continue reading.
You may be right for a buy-to-let property investment if:
- Your preference is investments that are tangible, unlike stocks or shares
- You understand the costs and time involved in owning and operating a property and how it may affect your potential return
- You are willing to tie up your money for a long period of time
- You are willing to risk that you may not earn a profit on your investment
- You understand property prices can go up and down
- You understand the risks of borrowing money to buy a property
Buy-to-let property investment is one that can be rewarding but with such a big investment it is vital that you understand the risks involved. There are other factors you should consider such as the costs of maintenance, repairs, taxes and void periods that will take away from your overall return. However owning a buy-to-let property allows you to build capital and build a strong property portfolio.
Buy-To-Let Investing Will Make You Money
There are two ways that you can get an income from buy-to-lets;
Rental yield – The rent you receive from tenants, minus maintenance and running costs (repairs and agent fees)
Capital growth – The profit you will earn if you sell your property for more than you paid for it
The costs of buying can include survey fees, solicitor fees, stamp duty land tax, and estate agent fees.
The costs of running a property will include mortgage payments with interest, maintenance and repairs, management company fees, and income taxes.
When you come to selling your property, you need an exit strategy. There are also costs involved with selling the property such as legal and marketing fees.
Buy-To-Lets Can Be A Safe And Secure Investment
Buildings and land are valuable assets, which is why you may find yourself targeted by fraudsters. For this reason, you should get insurance on your property to make sure that your investment is safe and secure.
Buildings insurance – You need to buy this if you have a buy-to-let mortgage. It can help to protect your investment.
Landlord insurance – This isn’t legally required but if you take out a policy it can help to protect you and your investment.
If you follow the legal requirements and accurately assess your current financial situation as well as your potential returns each year, the a buy-to-let investment can give you a great return with high rental yields each year.