Property is one of the safer ways to put your money to work. Buying a house to rent out can be a safe and profitable way to use your extra cash and add to your assets. Some people look at letting as a way to make money, but parents can also buy a place for their children and charge them rent. This could be seen as an investment in your future and the future of your family.
Mortgages for renting out property used to have higher interest rates than regular mortgages, but this has changed over the past few years. In an effort to get the private rental market to grow, interest rates have been lowered and criteria have been made less strict. This made more people want to buy homes as investments that would bring in money.
The Association of Residential Letting Agents (ARLA) runs the Buy-to-Let initiative, which is meant to encourage private investment in the letting market. Getting an agent can help convince your lender that you know what you're doing. A letting agent will help you find a good property and figure out how to take care of it. Members of the ARLA can provide compensation if there is a problem with rent or deposits through a bonding programme.
As a general rule, the rent you charge should be about 150% of the amount you pay toward your mortgage each month. This should cover all the costs. Leasing can be profitable, but you should think about how much time and money it will take. You will not only have to find and buy the right property, but you will also have to take good care of it, whether that means keeping it in good shape, furnishing it, or advertising it. Some of these jobs can be done by an agent, but keep in mind that you will have to pay them. Most of the time, you should think of buying to rent as an investment for the medium or long term.
You should always make sure that leases and agreements are written by a professional agent or lawyer. You can buy "ready-made" leases, but they don't cover enough to depend on. Don't forget to make a list of all the furniture and other things in the house.
Other costs to think about are insurance for the building and its contents, as well as renter's insurance in case a tenant doesn't pay. Service fees and maintenance costs: try to make sure that the property will need as little maintenance and repairs as possible.
