Buying a property to let can be a good investment. There are risks and considerations that must be taken into account before entering the lettings market. Increasing numbers of private landlords has meant that there has been an increase in the amount of property available and now tenants are starting to be able to be a bit more choosy over where they live. Making the wrong move can leave landlords with financial difficulties with mortgage payments if there is no rent coming in from the property. Here is our guide to things to consider when buying to let.

KNOW WHAT YOU ARE GETTING YOURSELF INTO

Investing in property to let is not an instant road to riches or a get rich quick scheme. You will have to have a certain amount of capital up front that you can afford to tie up for an indefinite period as a deposit. This is usually about 15-20% of the property value. You will also need to consider that the property will possibly require some maintenance to get it up to a standard where you can be confident it will attract tenants. This form of property investment is definitely a long term investment and by no means guaranteed. Fluctuations in market conditions, interest rates and inflation can all have effects on the property yield.

THE WRONG WAY

Making the wrong choices when investing in property could leave you with a finance draining property on your hands that could be difficult to sell and may result in you making a loss. Here are some things to think about:

• Buying property in areas that no one wants will mean that the property is difficult to let and may leave you having to make mortgage payments yourself
• Consult letting agents HUSBAND & Co. on the area you are looking to buy in and try to find out which areas and what kinds of property are in demand. HUSBAND & Co. should also be able to advise you about rent
• Charging too high a rent will put off prospective tenants so research into market conditions is worthwhile
• Location, location, location. This is one of the most important factors a tenant will look for. Desirable properties are conveniently located for access to highways, local amenities, restaurants and bars and have secure parking facilities.

Once you have decided on the location and type of property, it is time to think about the property itself. A poorly maintained property will immediately put off prospective tenants. A well maintained and attractive property will be much more in demand. If you decide to let the property furnished, it is worthwhile taking some time to find out what features make a property desirable to tenants. Again, HUSBAND & Co. will be able to advise you on this.

THE RIGHT WAY

Depending on your situation, you may wish to consider several different options. Whichever option you take, you should get as much information about your investment as possible. Letting agents are good sources of information about the market position in your area and the Institute Of Estate Agents will also be able to advise you on certain issues.

If you have the money and the time available, you may consider investing in a property that needs some work in order to get it up to the standard that you wish to let it in. This will enable you to 'tailor' the property to suit the needs of your tenants. If you do not have the time or inclination to buy a property that needs such levels of work, a newer property may be more suitable. However, it is worth remembering that even new properties will need maintenance and this will increase as the property ages.

A good location and a good (well maintained) property are the keys to success in the letting business. When you are buying the property, try to remember that it is not you who is going to be living there so try to look with an objective eye. Think about the property from a tenant's point of view.

LETTING AGENTS

Using a letting agent can be a good way of entering the letting market. A letting agent will bring the benefit experience to your investment, expose your property to a wider market and take away some of the hassle of the administration side. A note of caution: Always check that you are dealing with a reputable agent (The Institute Of Estate Agents of South Africa will be able to advise you on this). Expect to surrender between 10-20% of the rental income from your property to your agent (depending on the level of service provided).

Usually, it is the agent's responsibility to handle vetting tenants (checking references), inventory, drawing up handling tenancy agreements and handling the financial transactions such as deposits/bond money and collecting rent. For more information regarding the services of HUSBAND & Co., have a look at Thinking of Letting Your Property on the HUSBAND & Co. website.