How to buy a flat and rent it out
When it comes to buying rental property there are lots of different choices that you can make for the type of property that you invest in.
Of course, for many the choice will depend on what you are looking for, the amount that you have to invest and also, the type of tenants that you are hoping to attract too.
For some, a house is the best choice, for others they want to know how to buy a flat and rent it out.
To help you out on this property investment journey, here are the top tips when it comes to buying a rental flat that you can let out.
Think about money
One of the things to remember about buying a flat for a rental property is that they are usually going to be cheaper than it would be to buy a house. This means that they are more accessible to everyone who is looking to invest in property, rather than just those who have lots of money behind them.
Despite the lower price, the amount of money that a flat can cost is often still more than you may have saved up, which means that you are going to think about arranging a buy-to-let mortgage to cover the investment and secure your purchase.
Look in the big towns and cities
Another important thing to keep in mind when it comes to buying a flat to rent out is that you are going to want to try and stick to the larger towns and cities in your search. Whilst you can find flats all over the place, it is safe to say that they are most desirable in the busier, more built-up areas where space is limited.
Whilst this may mean that the flat will be a higher price, what it does also mean is that it is going to be easier to rent out to a tenant and the rental income will be proportionately higher (sometimes even more so).
Consider leasehold and ground rent costs
You should remember that many flats that you may buy to rent out are going to be offered as a leasehold rather than a freehold. Leaseholds come with more costs that you are going to need to pay as the owner and also extra things that you need to think about.
When you own a flat in a leasehold property you own that individual flat, not the entire building, this lease on the flat that you own will diminish over time and it can be difficult (as well as expensive to extend when the time comes).
This means that many lenders will want to only lend for flats that have a leasehold for over 80 years.
You will also need to pay ground rent for the building and also annual service charges too. These will cover costs that are associated with the upkeep of the property as a whole.
Remember the maintenance and repairs
Any property that you buy to rent out will come with associated maintenance and repair costs, these will need to be paid by the landlord, as the owner of the property, and is something that you need to factor in and keep in mind.
You will already have factored in the ground rent and annual service charges as above, but you will also need to think about any other work that may need to be carried out in the building overall, which could apply to you as the owner. This could include your entrance area (outside your front door) and gardens if your flat comes with a garden.
Aside from all of these things that you need to factor in and think about, owning a flat that you rent out to a tenant can be a great investment and help with your finances now and in the future too.