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This
is an Insurance article by an independent author and jml
Insurance takes no responsibility for its accuracy or content
Buy
To Let - Beware Of The Extra Costs That You Have Not Budgeted
For By Philip
Suter
I
have been involved with the property business in England for
nearly thirty years. I had been part of that sector of the
community that owned investment residential property before
it was fashionable and it was interesting to try out the reality
in 2006 of “Buy
to Let”.
The
plan was to purchase a one bedroom apartment in an area with
plenty of employment, close to good communications and that
would not need too much capital expenditure on it. Being involved
with the residential letting market in the south of England,
I know that a lot of areas are being too well developed. Numerous
blocks of apartments are being built and investors contact
the agents and say they will buy three or four apartments
in the same development. They then wonder why they are not
let quickly and often discover that in a development of say
100 apartments, only 20% are owner occupied and the remaining
80% have been bought by investors.
The
prospective tenant is spoilt for choice although many investors
do not want to go to the expense of furnishing a property.
They need maximum return on their investment and will often
approach local letting agents wanting their fees cut.
My
search was therefore in a more established area, an older
property that would let well and not as expensive as a brand
new slightly more modern property.
Most
of the research was done on the Internet and eventually a
couple of suitable properties to look at found. A decision
was taken immediately and as the finance had been agreed within
a week the Mortgage Lender’s surveyor had inspected the property.
We
had found a property that had wood laminate floors, would
need decorating and some updating in the bathroom and had
been let out for the past couple of years.
The
process started early in August and by November the deal was
completed. The decorating contractors moved in. The extra
expenditure also started. On closer examination the kitchen
flooring had to be replaced, the small number of tiles on
the kitchen walls had seen better days and had to be replaced.
The
good news was the local letting agent had found a tenant (whilst
the work was going on, although we had not instructed them
too early as tenants normally like to see the finished product)
and this person wanted to move in before Christmas that was
just around the corner.
The
property looked good; the tenant moved in – a complaint within
a few hours – no water pressure. There is a shower mixer tap
in the bath, but although it looked good, did not really work.
I
asked the contractor to take a look at it. There was no point
in putting in a pump as the hot water tank was too small and
the cold water feeder tank equally small. The property was
built in the late 1980’s and it would take hours to fill a
bath!
There
was only one alternative – a new water system. Unfortunately
this could not be fitted till after Christmas as it had to
be ordered and with the annual Christmas closedown in the
UK our tenant was not going to be able to have a proper bath
or shower. Fortunately this person was going home overseas
for Christmas.
In
early January the job was completed. Some £1,500 of additional
expenditure that was not budgeted for.
Remember
Always add on an amount to your budget for additional building
work or repairs that you thought would not be needed.
Allow
for that fact the Mortgage interest rates seem go up more
frequently than come down.
There
can be void periods before or after a tenancy when bills still
have to be paid.
Be
flexible regarding furniture. A lot of people simply do not
have furniture so check out local market conditions. You can
do this by talking to a local letting agent or viewing properties
on the web. In the UK there are a lot of property portals
offering rental property.
Finally
make sure that you take out the appropriate Landlord’s
insurances.
Philip
Suter is a Director of jml Property Services; http://www.jmlproperty.co.uk
a UK based company offering Insurance products on line at
http://www.jml-property-insurance.co.uk
and a holiday home advertising service http://www.jmlvillas.com
and management training within the uk. He a travel writer
and is a very experienced property consultant with over 30
years work in the Residential letting business in the UK and
served on the National Council of ARLA. He is a Fellow of
the National Association of Estate Agents (NAEA) and a Member
of The association of Residential Letting Agents (ARLA)
Article
Source: http://EzineArticles.com/?expert=Philip_Suter
http://EzineArticles.com/?Buy-To-Let---Beware-Of-The-Extra-Costs-That-You-Have-Not-Budgeted-For&id=454134
The
information supplied on this page is by a third party and
jml Property Services do not take any responsibility to its
accuracy ©jmlpropertyservices 02/07
See
also
How
to present your rental property for letting
How
not to present your rental property for letting
Professional
Property Organisations
Back
to Property Articles
______________________________________
jml
Property Services are members of the National
Federation of Residential Landlords, National Landlords Association
in the UK and British Chamber of Commerce Cote d'Azur - France
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