We know that all landlords expect both, but what is most important to you NOW whilst you are looking for property?
In general there are two camps which landlords fall in to. Work out which one you are in and you will kick start the process with a clear vision.
I have a lump sum for a deposit but no other spare money each month.
If this is your situation you should be looking to buy a property Which is TURNKEY READY or just needs an update that is within your capabilities. The reason for this is that you need to minimise your void period. A void period this is the time that you own the property but have no income from it, if this carries on for to long you can find yourself continually playing catch up with the rent to cover this loss of income.
You should be looking for a property which will pay for itself each month. This is the category which most landlords fall into. You invest a lump sum as a deposit, secure a BTL mortgage product & move tenants in ASAP so that the rent payments meet your outgoings.
You should always start with a “float” so that you have money aside for any eventualities which arise and need immediate attention. This means that if the boiler packs up or the cooker stops working that you have money to pay for these jobs. If you only have a small float you will need to add to it from the off. You should budget for the rental income to cover any related monthly payments and leave you an additional sum of at least £100 per month to build up in your account.
When a maintenance issue arises, it will need dealing with swiftly. By setting yourself up in this way you will minimise potential stress for yourself and ensure that you run a well-maintained home and limit your tenant turnover.
If you are lucky and you have little in the way of maintenance issues this will build up a pot of money for improvements which will arise through wear & tear ensuring that your property maintains its appeal for a quick relet.
You should be looking at property in the normal sales market or at properties which landlords are looking to offload. Get on friendly terms with your local agent and ask them to keep you in mind for any suitable property.
I have money to invest & can afford to improve a property and it doesn’t matter if its empty for a few months.
When a landlord has an opportunity to invest in property and has the budget and trades (or know how) to improve on a purchase and collect a higher rent you have a perfect storm. This kind of landlord will generally have a higher cash investment in the property.
You can look at properties which need updating and invest in the improvements hence increasing the value of your original investment. Investing in a new kitchen, bathroom and interior improvements will not only find you a good tenant at a full rent it will increase the value of the property itself. If you are able to make significant improvements you can consider further borrowing against the property in the future and repeat with another purchase, this is where you can start to build a portfolio.
Depending on the amount of cash which you have to invest you can be looking at buying via an agent or at property auction. If you buy at auction you will need to have good will power to not get swept along with the bidding. You should visit a couple of property auctions and acquaint yourself with the buying & selling process prior to attending the auction which you hope to buy at.
