Buying residential property to let is a good way to earn extra income while also making a huge investment. While doing so may seem to be very simple, it isn’t exactly easy!

If you are new to buying residential property to let, there’s a lot you need to know before taking the plunge. You certainly don’t want to be stuck with a property that won’t prove to be as profitable as you imagined it to be.

Here are some tips that will help you select the right residential property to let.

Research the Market

Sure, you will get returns on your investment, but you can't purchase just about any property that you come across. You need to research the market well before you make up your mind. You'd certainly want to invest in a house that can get you better returns now and in the long run.

Buying property means putting in a huge amount of money. You may also be taking a loan to buy a rental property. It is important to keep in mind that you could gain or lose if house prices rise or drop in the future.

You could also consider buying a holiday home overseas. You'll obviously need to research more if you intend to invest on foreign shores. Investing in property overseas also involves taking into account foreign currency rates and extra costs such as local and national taxes, lawyer’s fees, insurance, etc.

Remember that you don’t have to buy a property to let right next to your house or office. Your buy-to-let property doesn’t even need to be in the same city!

In addition to this, if you're taking a mortgage, you'll also need to ensure that you're approaching a trusted source. Say for example, if you want to purchase a property in Australia, you should check out mortgages from Newcastle Permanent. Not only will you get great rates, you can relax knowing that you’re dealing with a reputable bank.

Choose Wisely

Keep in mind that you’re not looking for a house that you can stay in; you are looking for a house to let. So don’t pass up the opportunity to buy the perfect rental property just because you didn’t like something about it.

It is possible for you to like a couple of properties and find it difficult to decide on one. Apart from considering a property’s appreciation value and the amount of rent you can get, you’ll also need to consider your target audience.

Keeping your target audience in mind will help you purchase the right rental property and will also help you attract more tenants. For example, if you’re targeting college students, you don’t need a luxurious apartment; having basic comforts would do. If you’re targeting young professionals, you’ll want to buy a property that is modern and located in an area that is well-connected to important areas by road.
 
Boost Returns

If you buy a property that you think won’t be very profitable, you can always try to boost returns by adding value to the property.

You may need to convert your property into something completely different, add things that will appeal to your target audience, or simply refurbish the entire place to make it look beautiful.

Do whatever you can to boost returns; but do think of the possibilities before you invest in the property. You don’t want to buy a property only to realize that there’s nothing you can do with it. Do note down the costs you’ll have to incur too.

Calculate Beforehand

You need to consider how much you are willing to shell out to purchase a house. If you’re taking a loan, you’ll need to ensure that you won’t have a problem repaying it. You will have two revenue streams though to help your finances- capital growth and rental yield.

Note that there will be times when you won’t have a tenant occupying your property. As such, you can’t count entirely on the rental yield. You will also have to bear all expenses related to maintaining the property.

Furthermore, you’ll also have to take into consideration all costs related to managing your property. Advertizing your property to attract tenants, finding tenants and dealing with them, preparing the property for new tenants, collecting rent, etc. will take up much of your time and money.

You can choose to manage your property by yourself or hire a property manager to take care of everything. Of course a property manager won’t work for free, but he’ll be able to take the burden off your shoulders. Moreover, hiring a property manager would be the best thing to do if you’re buying a rental property overseas.

Lastly, it is a good idea to get in touch with other landlords using chat forums and landlord organizations. Successful landlords will be able to give you the advice you need on profiting from buying to let property.

When you do find the perfect rental property, be sure to get a landlord insurance. You’ll find that there are a number of specialist policies that will cover you for a range of unpleasant situations starting from loss of rent to trashed property.

Now that you know the basics of buying a home to let, what are you waiting for? Get started on house-hunting as soon as possible!