subject: Buy To Let - How Do You Start A Property Investment Business? [print this page] "Buy To Let" has become a popular way in which to set yourself up to rent out properties. The process is a bit different than if you were purchasing a home because if the property you wish to purchase is one-bedroom apartments, you are much more likely to rent these out in the city limits than if you purchase a three bedroom home out in the countryside.
Decide On Your Investment Strategy?
For successful property investment you need to decide on a strategy, this can vary over time. Much depends on your initial budget as to whether you buy single apartments, a house to let, or a block of apartments.
What Type of Tenants Do you Want?
Think about the types of tenants you hope to gain, when you are considering the "Buy To Let" option. Obviously, there is a quite a bit of money in renting apartments for singles and couples without children, so this is something to keep in mind when selecting your best strategy.
What you are looking for are either long-term stable tenants for a house to let or a plentiful supply of shorter-term renters for one-bedroom apartments such as students.
Obviously, your risks vary depending on the type of tenants you are targeting.
Financing Your Property Investment
One of the aspects you should be aware of with the mortgage industry being what it is, that you will most likely be required to have a deposit equivalent to 25 per cent of the property valuation in order to qualify for a mortgage on a "Buy To Let" property.
If you decide on the "Buy To Let" option for your property investment business, you should know that mortgage lenders will be looking for your rental income to be roughly 120 per cent of the loan repayments, this protects the lender and some lenders require more. When you are purchasing "Buy To Let" properties, you are still required to go through the normal mortgage loan qualifying process.
Where To Buy Your Property Investment
The best strategy for purchasing "Buy To Let" is to make certain your purchase is in areas where you are likely to find quality tenants. It's the same with buying your own property to live in, location, location, location.
Obviously, you do not want to purchase a property that is in an area that no one would ever rent it. If for example, your strategy is to rent to singles or couples, the best options are to purchase the properties close to places of employment, near universities, or in other popular spots where people are continually looking, to rent apartments.
Final Thoughts
There is a lot of money to be made by purchasing "Buy To Let" properties, but it pays to be smart about it and purchase those properties that will gain you quality tenants as well as a good return on your investment. If you are new to purchasing investment properties, it is probably best to take it slow until you get some experience of the best areas to purchase.
Remember, "Buy To Let" is not just about the rental income that you need to sustain your property investment business, long term your objective has to be to leverage the capital gain. So do your homework before you buy, find out the average capital gain over the past 10 years or more for similar properties in the areas you are looking to buy.
by: Steve Barker
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