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Buy to Let Advice: How to Reduce Your Costs

By Parmdeep Vadesha

Republish: EasyPublish™ Published: 21Oct2008 Word count: 674 Viewed: 289 time(s) Get Free Content For Your Site

If you're a beginner in the buy-to-let arena or a landlord with an extensive experience in letting properties and a horde of property portfolio, you're in for an interesting ride. With the significant decline in property prices, experts have given positive predictions for the buy to let industry. Whether you're looking to get more breaks in the coming months or if you're keen on the levels of returns, the one important buy to let advice is to keep your costs to a minimum.

What the experts are saying

With the diminishing housing sales comes the rental market boom. According to The Royal Institution of Chartered Surveyors (RICS), the lettings market is thriving due to many sellers choosing to rent their properties. Being a landlord in the present market is now becoming an increasingly profitable alternative with soaring rents and yields providing excellent returns, RICS reported. Rents have continued to climb thus driving gross yields higher and the increasing profits have prompted landlords to stay committed to the market. Meanwhile, recent data provided by the Paragon Buy-To-Let Index showed a significant increase in the average UK rents in the 12 months to April 2008, with month-on-month growth recorded at 0.1%.

The present market also presents excellent opportunities for property investors:

* With repossessions set to rise, there are more chances to buy possible bargains - specifically below market value properties from motivated sellers looking to sell their properties quickly due to pressing life events such as divorce, debt, death and repossession, to name a few.

* Data provided at Fool.co.uk states that industry professionals predict a 10% increase in rental demand, mainly from first-time buyers and immigrants who either cannot afford to purchase or choose not to buy in an uncertain market. This additionally boosts the need for more rental accommodations.

Cutting buy to let costs

While taking advantage of the opportunities buy to let offers, it also pays to heed buy to let advice that should help you gain more profits from your buy to let property. Strive to reduce the costs you incur in maintaining the property to increase your property rental profit.

Here are some effective ways in doing it:

* Buy cheap. The success of buy to let investors depends on their ability to buy cheap thus finding below market value (BMV) properties is crucial. The secret is to find motivated sellers who are more than willing to sell their properties in return for a fast and stress-free sale. Motivated sellers such as divorcing individuals and those who plan to move abroad are at times open to selling their assets at 20-30% below the true market value. If you want to learn more about BMV and how to be successful in it, you can sign up for a property course offered by property experts.

* Get the best mortgage deal. Often the mortgage is the biggest cost for buy to let landlords. If you are able to reduce this by even less than 1% you can work out significant savings on a buy to let mortgage. One way to find excellent deals is by constantly checking your buy to let rates against the best rates currently offered by other financial institutions.

* Take out emergency cover insurance. Instead of hiring a letting agent, why not take out emergency cover insurance? This not only keeps your costs down but it can also save you money, time and hassle. Letting agents often require 15% for emergency repairs but you may still end up shelling out money for the repairs yourself. However if you get a landlord's cover insurance, most of your emergency repairs will already be insured.

While no one really knows what the future holds for buy to let, an uncertain market doesn't have to mean you cannot maximise your profits and make the most out of your investment. Just by following simple buy to let advice, you should be able to reduce your buy to let spending and be able to stay one step ahead of the game.

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