What you need to know about investing in buy-to-let


Investing in property is a great way to create some regular passive income for yourself, whether you end up owning the actual rented home or not.

Like every investment, it has the potential to offer you some brilliant rewards, but as we all know, property is also not without its risks.

So, if you’re wondering if property fits neatly with your investment goals, then you should start by looking at the below considerations

The property investment checklist

We love to use this checklist with our potential investors to ensure that property is right for them.

If you’re ticking most of these boxes it means you should give it serious consideration:

  • Do you like to see something tangible from your investments – instead of investing in company shares?
  • Do you mind having your capital tied up for an extended period?
  • Are you aware that, like other investments, prices can fluctuate up and down?
  • Are you aware of the liabilities you are taking on when investing in property?
  • Are you aware that any maintenance and repairs costs will come from your profits?

If you don’t answer yes to most of these, then perhaps it’s time to give property a second thought. However, even if you do have concerns at this stage, it still worth talking to us as we may be able to allay some of them for you.

Financial obligations

Buying property these days almost always means getting a mortgage unless you have a spare €200k or more sitting in your savings account.

However, a buy-to-let mortgage comes with different rules than a residential one.

It’s more likely you’ll have to pay a 30% deposit, and the legal costs will be more expensive as well.

On top of that, there are costs involved if a tenant leaves your property without anyone to replace them.

So, although the gains from investing can be many, you will need to keep these obligations in mind before jumping in.

Capital Gains Tax

There’s very little of value that can’t be taxed, and the same holds true for income earned from rent, as well as the profit made when you cash in on your property investment.

This profit will be subject to Capital Gains Tax in almost all conditions, and here we can potentially help you find some exemptions or reliefs.

Landlords insurance

We know the focus so far as all been on financial pain points that can come with investing in property. However, there are also ways you can mitigate some of the risks associated with it.

We’d advise all new landlords to get landlord’s insurance. As we touched on earlier, not all tenants will treat your place well, or be able to pay the rent.  Asking for a deposit from them at the start may not be enough to cover the monthly losses as result.

However, with Landlord’s Insurance, you’ll be able to cover things like non-payment of rent, malicious damage, or even things like flooding.

Like all kinds of insurance, it might seem like a slightly unnecessary expense… until something happens!

Property management companies

Another helpful way to manage your property is to allow a letting agency to do it for you. Yes, again this will cost you. However, it’s something that can easily be built into your rent, so it shouldn’t cost you a cent.

What they can offer is a rental guarantee, so you’ll still get paid even if the tenants don’t, and that’s even if you lose tenants for an extended period while they’ll also take all the time and hassle out of things like making repairs.

It’s a very popular way to enter the buy-to-let market, simply because it’s a low-stress option for you.

In summary

So, as you’ll have read, there are plenty of financial obligations and risks to consider before you enter the market.

However, if you know that you can afford those obligations, there are also ways to mitigate those risks and take a lot of the hassle out of looking after your investment too.

Like any investment, doing your research and talking to experts is essential before you dive in. That’s where we can come into our own as your guide throughout the entire process.

It will mean that once you do go in, you’ll be going with your eyes wide open, and be ready to take full advantage of any opportunities that present themselves.

Here at Platinum Property, we’re always happy to help with any part of the property process. Click below to find out more

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