* What are the benefits of buy-to-let?

The concept of buying property for the purpose of renting to others has been around for thousands of years. The best part about buy-to-let is that there are many ways to earn a regular income. Income from this type of investment is two-fold. First, there is the fixed rental income that you, as the landlord, obtain from the tenant every month. Then, there is the additional potential paper profits from capital appreciation as the value of the property rises.


* I want to invest in buy-to-let. How do I begin?

Your first step on to the buy-to-let investment ladder is to choose the right property. Think about the type of tenants that you could possibly have. Students are looking for rooms that are a stone’s throw away from their university or college. Young professionals prefer stylish and modern places within the city’s trendy districts. Families would like safe and secure homes in the suburbs. When deciding what property to buy, also consider its potential in terms of expected rental yields and its ability to generate capital growth.

Once you have found the perfect property, the next thing you need to do is to arrange for a buy-to-let mortgage.


* Should I take out a buy-to-let mortgage?

A buy-to-let mortgage is the loan used to purchase a property with the aim of letting it out to tenants. Traditionally, buy-to-let mortgages have been considered by banks and lending institutions as commercial loans. Thus, lenders have demanded higher interest rates for those taking out a buy-to-let mortgage. However, with the recent trend of encouraging the private sector to invest in housing and rentals, buy-to-let loans are not as restrictive as before. Although the interest rates are still higher than the usual owner-occupied mortgage, buy-to-let loans are now available at affordable rates for first-time investors.

Buy-to-let lenders typically lend up to 85 per cent of the lower of value or purchase price of the property.


* Do I need a letting agent?

Before you decide to let out your property, decide how hands-on you want to be. If you cannot devote as much time and effort as you should on your buy-to-let investment, it could be a good idea to consider employing the services of a letting agent.

The advantages of having a professional letting agent are numerous. They are familiar with the market and the location, and they can help you determine how much you can rent the property for and the type of tenants who will most likely rent it. A letting agent can also offer great advice on fixing up your property, from the decoration to furniture and fixtures, to attract potential tenants.

It is preferable to go with a reputable and experienced agent you can trust to manage your property. A sign of credibility is to choose an agent registered with the Association of Residential Letting Agents or ARLA.