If you’ve been successfully managing a buy to let property for some time, then you may be thinking about expanding your business. There can be many things involved when it comes to understanding more complex buy to let mortgages.
Here are some pointers on things to consider when you’re thinking about growing your buy to let property portfolio.
There are several ways to go about expanding your portfolio. Do you step out of your comfort zone and try something different, or do you keep on doing what you know best? With so many different types of properties, regional variations in demand, and different types of tenants, you may decide, after seeking advice, on a mixture of property types. Alternatively, you could specialise in one market or location where you feel comfortable or your experience lies, for example, perhaps you want to become known as the go-to-landlord in your local university town. By sticking to what you know and buying similar kinds of property you may also be able to take advantage of deals when it comes to bulk buying things like paint, flooring, furnishings and bathroom and kitchen fittings.
It’s best to think about what makes the best business sense for yourself. Managing one property may not take up much of your time, particularly if you have a letting agent, but once you start to own more, then not only is it going to take up more time, but your expenses will also go up and so will your risk. With your first couple of properties, you may have been able to hold down other employment but if you’re serious about expansion then it might be worth considering making this your full-time job. Being self-employed means being in charge of your own destiny but think about who covers for you when you want a well-earned break or whether the potential added stress is what you are comfortable with.
As with all businesses unexpected things may crop up and with more properties there is more risk of them being empty at some point. Even one month with no rental income could be a real drain on your finances. Building up a decent sized pot of cash could also be useful if a property comes on the market, and you want to move quickly. Shop around for savings products that suit your savings goals, often better rates can be found at specialist banks, rather than large high street banks. You may have times when you will not be able to borrow as much or as fast as you need and having some spare cash means you can snap up that bargain.
Landlords will often sell their portfolios at auction because of the ease of selling, and these properties are ideal to go after as you should have a good feel as to whether they will make good rental properties. Always do your research before buying at auction and although you can often get a property at a great price it is possible to pay over the odds, particularly if you become embroiled in a bidding war. Set your maximum price and stick to it.
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Subject to status. If you fail to keep up with payments on your mortgage a ‘receiver of rent’ may be appointed and/or your rental property may be repossessed.