Our last blog looked at five of the main positives for considering buy-to-let investment. However, becoming an investment Landlord isn’t for everyone and in this article we will look at some of the reasons against purchasing a property to rent out.
Although mortgage lenders are becoming more comfortable with buy-to-let mortgages and they are becoming much more accessible, they are still requesting a large deposit up front. Although in the past few years a 15-20% was normal, lenders are much more likely to ask for deposits as high as 25% in order to secure your mortgage on an investment property.
You could choose a desirable location, the perfect house and have the rent at a perfect price, but still your property could remain empty at times. Commonly, landlords who own a number of properties budget for two-three months of empty or void periods each year, just to make sure they can get through the empty periods without any serious repercussions.
Being A Landlord & Your Responsibilities
Buying a property and renting it out to a tenant sounds simple enough on paper, but it can be much more complicated in practice. As a Landlord you have a number of responsibilities, and they will cost you money. There is no point looking to rent out a property if you aren’t willing to spend money to maintain it. Of course, some of the stress of being a landlord can be relieved by using a Letting Agent to manage a property for you.
You may have a Letting Agent find a tenant on your behalf, or you may find one yourself privately. Even if background checks are done thoroughly, sometimes you can find yourself with a Tenant who is demanding and doesn’t take care of your property. Unfortunately despite the utmost amount of caution and best intentions from the outset, this can still occur on occasion. There are many problems Tenants can cause, be it damage to the property, misuse of a property or simply not paying their rent. There are some laws in place to help Landlords in these cases, but it still a very stressful experience to go through.
Assess Your Attitude To Risk
Really, when looking into this kind of investment you need to make sure you’re happy to take the risks involved. All investments come with risks, but being a Landlord really requires someone who is happy with the responsibilities of providing a home for someone else, and who is happy to deal with owning a property which requires periodic investment and up-keep.
As you can see from this blog and our previous entry of the positives to becoming an investment Landlord – there is much to consider before making the decision to get involved in the rental market. As stated above, no investment is risk-free, but you can minimise your risk by taking steps such as appointing a reputable letting agent and looking at insurance policies which can cover you in the event of problems.
Ready to take the plunge? Talk to one of our mortgage advisors today about buy-to-let mortgages.