If you have ever thought about getting into the world of property investment, now would certainly be the right time to do so. As a result of the recent COVID-19 outbreak which has drastically shaken the property market, landlords are now taking advantage of extremely low-interest rates which have increased the popularity of the property market for investment. There are, however, many factors needing to be considered before investing in a buy-to-let property, including a financial plan, the location and the type of property to purchase.
If you are interested in purchasing a buy-to-let property in the near future, this blog will give you all the information you need to know to get started:
1. Understand what is involved
You may have a brief understanding of buy-to-let investment, but there is far more involved than what you may have expected. To achieve success, you’ll need to sacrifice a large proportion of time and money to this form of investment and understand that there are certain occasions when aspects simply don’t go to plan. Being a landlord means you’ll also need to follow certain legal obligations, including the likes of:
- Maintaining the property (and making the necessary repairs – some of which are tax deductible)
- Carrying out yearly health and safety checks
- Evicting tenants by following legal procedures
Do be aware that applying for a mortgage for a buy-to-let property has different requirements than if it was a personal property – there are separate rules and interest rates to be aware of.
2. Know your target tenants and cater to them
Just as a business would cater to its target market, it’s important to cater to your target market when it comes to seeking out a suitable property. You need to ensure that the property you choose would cater to their needs and this can be achieved by carrying out an online property search on websites such as Ghana Property Centre.
3. Think about the finances
Any form of investment has some element of risk to bear in mind, therefore, before committing yourself to the financial constraints, you need to ensure that you can realistically afford the expense. It would be wise to seek the assistance of a financial advisor to ensure that a buy-to-let investment ties in with your financial budget.
Do remember that aside from purchasing and furnishing the property, you’ll also be responsible for maintaining the property when repairs are needed.
You also need to be aware that you may not always receive an income if your property is empty for several months at a time or if your tenant doesn’t pay their rent by the deadline, so it shouldn’t be the only form of income you rely on.
When speaking with a financial advisor, they should draw up a financial plan so you’re able to get a clearer insight into whether you can realistically afford a buy-to-let property. It would also be wise to set up a 6-month emergency fund to fall back on in the event of unprecedented repairs or lack of rental income.