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Real Estate Investing: A Guide to Buying and Holding Properties

Real Estate Investing: A Guide to Buying and Holding Properties

It is quite different from the process of acquiring a house for you and your family to live in, compared to the process of purchasing an investment property for you and your family to live in. There are many additional factors that must be taken into account prior to taking such a significant move.

The current buy-to-let boom has resulted in a significant increase in the number of competitive mortgage offers being available, adding even more gasoline to an already burning fire. Many borrowers have discovered that they have gotten themselves into trouble by jumping on the bandwagon without first doing enough investigation into the prospective business.

It is critical to do extensive market research. However, even if you opt to borrow a significant portion of the purchase price of the home, it will almost always be necessary to invest a significant sum of money to establish yourself as a landlord.


Both the location and the kind of property you want to buy are critical considerations. For example, in certain locations, demand may outstrip the quantity of available rental properties, and one-bedroom apartments may be more difficult to rent than two-bedroom apartments.

It is usually a good idea to speak with a number of letting agents in the region where you want to purchase a property in order to get an understanding of rental demand. This is also an excellent method of determining how much rental income you can anticipate from your property.

Whenever you are looking to buy a house, a lender will look at your income in order to determine how much money they are willing to lend on your behalf. Mortgage lenders, on the other hand, assess how much they are prepared to give when it comes to buy-to-let mortgages in a different manner.

Many lenders will require rental income to cover at least 130 percent of your monthly mortgage payments, so double-check your numbers before signing on the dotted line.Once you have completed your calculations and identified a desirable neighborhood in which to purchase a home, you can begin looking around for mortgages.

Many lenders provide mortgage advances on buy-to-let acquisitions of up to 75% of the property's value, which is a significant amount of money. On some buy-to-let plans, however, it is feasible to borrow up to 85 percent of the property's value, which is a significant amount.

You may find a variety of buy-to-let mortgage options that are suitable for you; see below. You have the option of choosing between fixed, discounted, and variable interest rates.

Some lenders may require that you hire a property manager to oversee the management of the property. If this is the case, you should expect to pay management fees of up to 15% of total rental revenue generated.In exchange for utilizing the services of an agency, you may expect them to find renters on your behalf, verify references, and collect the rental money.

As is the case with other kinds of mortgages, the lender will need you to have at the very least a building insurance policy in place before issuing the loan. The inclusion of a contents cover is also highly recommended, but it is not always required.

An Action Plan for Purchasing and Renting Real Estate
  1. Keep away from regions that are already saturated with buy-to-let homes, since supply may frequently outstrip demand, making it difficult to locate renters in these areas.
  2. It is advantageous to bargain! Although it may seem that competition for property is intense, if you are willing to be patient, you may be able to find yourself a deal at a price that is far below market value.
  3. When it comes to decorating, it is a good idea to spend a little bit more money. Consider whether you could picture yourself settling down there. If this is the case, you may want to reconsider your interior design.
  4. Become a member of a landlord's organization. For about 100.00 each year, you will get access to advice and support on a variety of topics, including taxation and law.

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