The buy to let investment option has grown increasingly popular in the last few years, despite the global economic downturn. But, as with any other type of investment, there are a number of pros and cons which need to be weighed up before you dive straight in. Buy to let investments can be approached in one of two different ways.
The first is the ‘hands off’ method, in which you can arrange for a property management company to take care of everything concerning the property and tenants on your behalf. The ‘hands on’ approach is of course, the method of managing all aspects of the property maintenance and dealing directly with your tenants yourself.
If you choose the hands off approach, a property management company will be responsible for finding tenants to occupy your buy to let property investment, collecting rent, maintaining the property to a high standard according to the latest health and safety codes and working with local tradesmen such as joiners, carpenters and plumbers. They will sort out any problems, relieving you of any late night phone calls or chasing payments. This is ideal if you are planning on being in possession of more than one property or if you live far away from the property.
When consulting a buy to let investment calculator, you will need to add in the cost of the property management. Most companies usually charge around 10-15% of monthly rental income for their services and maintenance. You will also need to check whether or not these costs include insurance for the property and the letting of it. Check all the relevant documents and make enquiries with the company.
If you enjoy the feeling of involvement, being in full control of your property may be just as important to you as your buy to let return on investment. However, taking the hands on approach can be much more demanding than you initially think. There are a large number of legalities which you must ensure are met in order to avoid lawsuits, you must be available to your tenants at all times and will be in charge of finding new tenants once their lease is up.
But there is an upside to taking this approach to your property investment. Buy to let landlords find it easier to keep up with what their tenants need by opting for this method of investment. Buy to let investors are also likely to form a relationship with the tenants, which could help them respect the property and take more care of it. However, this approach to buy to let investing will only be practical if the investor lives close to the property as they will need to visit the tenants from time to time.