The location of your buy to let property is one of the most important variables you need to consider when looking for your first investment property.
Getting the location right will mean a steady flow of good rent paying tenants.
However, if you make a mistake with the location you could be faced with long voids, damaged properties, and disruptive and possibly even dangerous tenants.
One of the first things you need to do before buying your property is to gauge whether there is a market for your choice of property in your location. NEVER buy in an area where there is little or no perceived demand.
Whether you are investing in HMOs (Houses in Multiple Occupation) or single family properties, I find that if your location is good, you will always exceed your expectations when it comes to finding good reliable tenants.
In the past 10 years, I have found that the market for sharers has increased significantly especially in sought-after cities with good work opportunities and transport links.
I find the following types of people wishing to share with others:
I get several calls a day from the above types of potential tenant looking for individual rooms to let in a property. The same is true for young families who cannot yet afford to buy their first home and are looking to rent smaller 2 to 3 bedroom houses.
So how can you guarantee that you will easily let your property once you have completed on the purchase?
Advertise
If I am unfamiliar with the location of my anticipated purchase, I will normally place an advert in the local paper advertising for my particular tenant type. For example, if I am looking for professional sharers, I will state so. Conversely, if I am looking for a family, I will indicate this in my advert.
I normally place adverts for a minimum of 4 weeks. If I receive just a couple of calls in the 4 weeks, I will most likely not invest in that area. However, if I receive 10s of calls for my proposed property, there is a greater chance of me buying in that location.
When answering calls from tenants, I will always ask them questions to help me complete my market research. For example, I will ask them specifically what they are looking for. Which particular areas and streets are they interested in and why? What size of house would they prefer to live in? In the case of sharers, how many people are they happy to share with etc?
Getting these types of questions answered by my potential tenants is valuable in my search for the ideal property in the ideal location.
If I am looking specifically for a student tenant, I will visit the local university and not rely purely on advertising.
I will:
* Visit the University Accommodation Office and ask them what the best locations for student properties are. Always buy in these locations even if they are more expensive than others further down the road.
The university is very knowledgeable on their local areas and if they don't like any particular location, be sure that every single student on campus will know about it!
* Try not to buy my student property in a location greater than a 20 minute walk from campus.
Students have become lazier and more demanding over the years. They prefer to hop out of bed at 8.55am for a 9am lecture.
Whenever you take on an investment property by borrowing the money to get it, you're assuming a risk that the cost of borrowing that money will outpace the property's income, which can cause severe negative consequences over time.
Sometimes it makes more sense to take out a home equity line of credit rather than to refinance the first mortgage. This money can be used over and over without paying new loan costs. In other words, the investor can purchase one house, sell it, pay the money back and then have immediate access when another bargain property comes along, without paying more loan fees.
So investigate both options before you make any decision to borrow, and make sure you're comfortable with the risks that are inherent in any investment opportunity, because things can and do go wrong--and when they do, your home may be in jeopardy.
Since you can claim the interest on your principal residence on your taxes, you many realize some tax benefits to refinancing, especially if you're planning to use the money to pay off other debts that aren't deductible. Check out IRS Publication 936, "Home Mortgage Interest Deduction," before you make any decision. It discusses how to approach the interest involved with owning and financing your home.
Refinancing of your home is a serious step, and shouldn't be taken lightly. If you're like most Americans, your home is the single largest asset you own. Make certain that you know all the ins and outs involved with the purchase of the investment property you're considering before you commit to a refinance.
If, after long and careful consideration, you determine that the investment is sound and won't adversely affect your home and family (always think in terms of the absolute worst case scenario; that way, even if the sky falls, you know that you'll be able to survive financially), you can begin talking seriously with your lender about the advantages and disadvantages of refinancing or a home equity loan. Investors tend to be an optimist lot, but never let a rosy-looking profit potential blind you to the possible pitfalls if thing go awry. A little caution at the beginning of the process can save lots of both financial and emotional heartache and frustration later on.
If you feel insecure about risking your home, look into 100 percent financing options for investment properties. With good credit, you open the way to buying property without jeopardizing your home.
The best way for you to get started investing in real estate is to do your research first. Understand your local market trends, your local employment outlook, and your capabilities. When you know how to make a wise investment, you can make money and secure your future.
Learn how to find, finance, fix, and sell houses. Real Estate Investing Information
Both Javaid Kiyani & Jeanette Joy Fisher 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.
Javaid Kiyani has sinced written about articles on various topics from Real Estate, Property Agents and Management Software Solutions. Dr Javaid Kiyani is a successful Property Investor and Internet Marketeer. With 10 years experience of property, his knowledge of is vast as ev. Javaid Kiyani's top article generates over 12100 views. to your Favourites.
Jeanette Joy Fisher has sinced written about articles on various topics from Real Estate, Network Marketing and Real Estate. Jeanette Fisher teaches beginning investors 5 easy ways to find, finance, and fix houses. Learn how to profit in ANY real estate market. Free ebook, The Truth about Making Money Flipping Houses. Jeanette Joy Fisher's top article generates over 135000 views. to your Favourites.