Be aware of the cost implications of a buy to let deal

Posted under Advice by Alan

With so much advice on offer to realty investors it can often get tough to make an informed and sensible decision before actually taking the plunge. With property prices now cooling and with lenders becoming more cautious - - coupled with the ‘credit crunch’ - a very careful analysis of the cost implications and potential pitfalls of being a landlord have become necessary.

What then is the way out? The answer is simple. Any individual, who is making an investment decision like buy to let, should first do a thorough research - a point that is all the more vital in the current context. For example, you should determine the maximum amount that you are in a position to spend for buying a particular property.

You will need to work out your available down payment and other expenses like the services of a solicitor, survey/valuation fees, stamp duty, broker fees etc. while considering the final purchase price.

You should also take into account after-purchase expenses, comprising loan repayment, renovation to make the structure fit for its intended use, utility deposits & agent’s fees if you plan using a letting agent to attract/vet tenants. Other expenses that you will incur are insurance coverage, routine property maintenance as well as ground rents (if applicable), and last but not the least, property taxes.

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