Before considering buy to let, it is a good idea to note what could go wrong. The ways that this could happen are:
- Paying too much for a property initially.
- Having to spend too much money on repairs and improvements.
- Having too many void periods (when the property is not let).
- Tenants not paying rent on time or at all.
- Rental income not covering the cost of any borrowing.
- Uninsured losses and damage to the property.
- Selling at a loss or not being able to sell.
With modest luck and good planning, though, buy to let can be a great investment, especially if you take a long-term view and buy and sell at the right time. If you do, it can be possible to:
- Buy a property at less than its ultimate value.
- Make changes that add more value than they cost.
- Secure regular rental income that rises over time.
- Enjoy capital growth that can be realised by eventually selling or by borrowing more, perhaps to buy more properties.
In many property markets – and the UK is no exception – many people choose to (or have to) rent. This can include:
- People saving to buy their own home.
- People who plan to stay in a property for months rather than years.
- Students.
- People whose jobs mean they move around frequently.
- People who do not want the added responsibility and potential costs involved in ownership.
- People who cannot afford to buy. This can include people who want to live in a better property than they could afford to buy.
- People who believe that property prices will fall.
