The first step is to create a financial strategy and calculate how much you can afford to invest.
Find out about other costs (e.g. solicitors, stamp duty, survey/valuation fees, broker/lenders fees etc.)
Decide which solicitor you are going to use.
Research the market. What type of property will provide the best returns (i.e. increase in value and rental returns). Will you manage the properties or will you employ somebody else to manage them for you?
When you have found the right property, and have all your finances in place, make an offer
When the offer is accepted, tell your solicitor the basis of the deal you have agreed. NOTE: from this point onwards you are spending your own money. The vendor does not have to sell the property to you until you have exchanged contracts. The vendor could, for example, accept a higher offer from somebody else and you would have wasted your money. Gazumping is commonplace. You need to exchange contracts quickly to stop this happening to you.
Contact the vendor's agent on a regular basis to report your progress and to check on progress with your property. Progress reports to the vendor and / or his estate agent will significantly reduce the risk of your being gazumped. Advise them what is outstanding and what is being done to progress matters. Report to them every four days.
Speak to your solicitor on a regular basis (good ones will call you), ensure they are chasing other involved parties.
It is now up to the solicitor to exchange contracts. They cannot do this until you can prove that you will have enough money to complete the purchase. This usually means that a mortgage offer is required prior to exchange of contracts. Also, the solicitor is responsible for ensuring that you are purchasing what you think you are purchasing. This will include obtaining local searches, making sure that all previous mortgages are cleared, checking boundaries etc.
The solicitor will also be responsible for handling the purchase money, i.e. receiving it from the lender and paying it to the vendor. In the case of a refinance the solicitor will also pay off the old mortgage with the new mortgage money.
Once contracts are exchanged, the property is contractually yours. You must, therefore, insure the property at this point. Use established buy-to-let insurance brokers to minimise costs.
Completion usually takes place about one week after exchange of contracts. Once completion has taken place you can let the property, subject of course to its condition. If the property is vacant at the point of exchange of contracts, it is in your interests to negotiate a longer period between exchange of contracts and completion, together with negotiating access to the property so that you can decorate it. The vendor does, however, have the right to refuse this.
Monitor the property value so that you can capitalise on opportunities to release further money through remortgaging or further advances, in order to fund deposits on more properties
Buy To Let Property
When one has the capital to make a significant investment, the thought of buying a property to let surely comes to mind. Letting out a property can be a fine source of capital growth, however it also requires much work on the part of the landlord. If it is your intention to purchase a property to let, it is important to know a few of the pitfalls along the way and how to avoid them.
The first thing you must know is for what purpose you are buying the property. Your objectives might be income, which is your month to month profits from the tenants, or capital growth, which deals with making a profit through increased equity from the second property as the value increases over time. This choice should influence what type of property you purchase and the location of the property.
Maintaining a property is an expensive process. As a guide, you should be aiming to achieve a gross rent of at least one hundred thirty-five percent of the property's interest only mortgage repayments. This will help you cover your costs should anything go wrong with the property.
There are three great differences with buy to let mortgages that you should know about. Firstly is rent potential. The decision as to whether or not a mortgage is offered is most often based on the rent you will earn in addition to your income. In some cases your income might not even be considered. Secondly is the interest rate. Buy to let mortgages come with a slightly higher interest rate. Lastly is the larger deposit. The deposit is typically a minimum of twenty to twenty-five percent of the property's value.
Research into the type of mortgage you wish to apply for is important, of course. For many people, fixed rate interest options are preferable. Repayments for buy to let properties can frequently be done in interest only repayments, but if you wish to repay the entire value of a property then look for a mortgage that will allow you to overpay each month if you desire.
Finding a loan that will calculate interest daily instead of annually is more fair to you, since your interest will be calculated on a current balance instead of on repayments that you have already made through the course of the year.
Before you decide to apply for your mortgage loan, think about how you want to let your property. You can let the property in various stages of furnishing, but if you choose to let a property with furnishings you will have to buy the furnishings and deal with any damage caused by the residents while you are letting the property. Determine if you can afford to furnish the property, and factor that into the cost you will ask for to let each month.
Buying a property to let can be an exciting experience, and although it is hard work it can pay off well in the end. Determine what exactly you want to get out of the letting experience, and how you want to let the property. After that, the sky is the limit.
Both Mike Stepney & Tim Day are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Mike Stepney has sinced written about articles on various topics from Marketing, Mortgage and Property Guide. Mike Stepney is a key player at in the online department at . For more advice on property development and. Mike Stepney's top article generates over 9900 views. to your Favourites.
Tim Day has sinced written about articles on various topics from Credit Cards, Property Guide and Credit Cards. Written for creditmarket.co.uk a UK finance directory and a source of information and articles about a variety of personal finance issues including. Tim Day's top article generates over 9900 views. to your Favourites.
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