Make sure you'veconsidered at least these things before you become a landlord:
1) Cash vs.Mortgage purchase – even if you are lucky enough to make a cash purchase,it is still recommended that you buy using an interest-only mortgage as itactually earns you better returns. When purchasing on a mortgage you only payback the interest on the loan instead of the capital the house is worth. A recentsurvey by the Wriglesworth Consultancy revealed that between 1996 and 2014buy to let properties bought with an interest only mortgage returned 16.3% peryear combined to the annual return of 9.3% for those with cash purchases.
2) Define yourinvestment aims – this all depends on your current circumstances. Aproperty that provides good, steadyincome from rental yields will suit those who are using property to supporttheir income. For others, a long term capital growth can be more appropriate asthey may have enough income but are saving for the future when theircircumstances might change. You may want to look for property in areas withstrong capital appreciation if: you will need capital in retirement; you aresaving for a future project i.e. portfolio expansion or you want a good valueproperty to pass on to your children.
3) Researchand refine your location – once you know your aims this will help you findthe right location to invest in. Areasthat offer good yield tend to be those with average house prices but highrental demand, creating a good balance between invested capital and return onthe investment. Places with good capital appreciation tend to be locations witha strong economy that due to growth, are only going to get stronger and placeswith high demand for property but limited housing supply.
4) Researchsupply and demand- when choosing the type of property to invest in – lookat what people in the area really want: are quality rooms going like hot cakes?Do houses linger longer? There is no point spending thousands converting ahouse to a HMO if there are already plenty on the market. Ask the advice ofletting agents; ask residents and use propertyportals to monitor how long properties stay on the market. If you provide atype of accommodation that is in high demand and low supply, you may be able toask for a higher than average rent.
5) Do yourdue diligence – you really need to do the maths on potential properties beforeyou put down any offers, factoring in extra costs for mortgage broker fees,legal costs, stamp duty and any renovation work the potential property willneed.