By Dawie Bester
Buy to let is understood as buying property to rent to another. This way the property is not used for one's own residential purposes. Instead, someone else will be making use of the space or the property. In case you are unable to fund the purchasing of this property, banks are willing to provide you with home loans for this purpose. There are several banks which have buy to let home loans. If you are looking to purchase a buy o let property, ensure that you have a good idea of the kind of bank you want funding this loan.
Presently, the financial situation in countries makes it possible for individuals to opt for buy- to- let deals. The complex processes involved in the lending prerequisites created by the National Credits Act makes it a possibility. The current economic conditions is making the availability and sanctioning of home loans relatively difficult. Another aspect is that properties that are being rented out will continue to have more value even in the future. Banks currently have a large number of properties in their custody. Plenty of people are selling their homes and other properties to meet the financial demands of day to day living ever since the recession has hit. Currently, interest rates are quite low in order to facilitate a relatively more comfortable process of purchasing property.
The value of a property will determine the amount of loan that you could get and this is known as gearing. The term gearing is understood as a ratio- the ratio of the amount you are investing in the property to the amount for which your loan is approved. Current economic conditions mandate that a certain deposit has to be made before a loan is sanctioned completely. Banks offering 100% loans is a rarity. There are stringent norms that one has to go by to get approval for a buy to let property.
Certain criteria that have to be fulfilled for qualifying buy to let home loans:
Banks will check to ensure that one does not have any defaults. They also look into one's income, ability to pay the loan he/she has applied for, other debts that you have currently and one's job aspects. If the loan applicants have a joint income, then that qualifies them for a bigger loan. The minimum amount sanctioned as a loan in this case would be R 30,000 per month.
Sometimes when banks calculate the income of the loan applicant (for a buy to let loan), they consider the possible earnings from the property as part of the applicant's income. Deposits made and gearing are also considered.
When applying for a buy to let home loan, there are certain documents that you will be asked to present to the banks. It is best to be prepared with them. Some of the documents that you may be asked for are: identification proof, income proof, address proof, bank statements for three months and a copy of the document of offer to purchase. Joint loan applications have requirements unique to it.
Some additional points for consideration may be that it is best to rent your property to those who can pay you the rent, who can make the property profitable for you in the long run. Attorney fees, mortgage registration and other permits will have to be secured.
The author helps South African citizens to get Standard bank home loans approved. For more information visit http://securebonds.co.za/.
Article Source: http://EzineArticles.com/?expert=Dawie_Bester
http://EzineArticles.com/?Buy-to-Let---How-it-Works&id=4753281
Saturday, September 18, 2010
Saturday, August 28, 2010
Real Estate Investing - What You Should Know to Reduce Your Risk
By Tony Hodgison
When the recession became a real problem to the economy, the real estate market was the hardest hit in terms of investment properties. The value of homes and other property types plummeted quickly and drastically. Homes that were valued in the millions of dollars were now sitting at an all time low of barely six figures. Now that the recession has lifted somewhat, what does that mean for investing in real property?
The current market, while still volatile, is starting to recover. However, because it is still volatile and any investment can take a turn for the worse, learning the best techniques for the specific market you are hoping to be investing in is necessary. Some basic knowledge is needed to invest wisely because doing so can net some large profit margin success stories; however, doing so the wrong way or with too much risk involved can leave an investor with nothing.
Understanding the local trends is the first step to safe real estate investing. Knowing what the target area is doing and how sales are trending is essential, as well as knowing what other investors are getting from the same market. What has the average investment in the local property been going for? How long are the properties sitting on the market? How many have gone to auction?
While these are just basic questions, the answers to them can help determine the outcome and garner a successful investment. The answers are called market indicators and they are used to help the investor make a proper decision about investing in a property or not.
Another thing to consider when investing in real estate is the amount of inventory involved and the trends involved. Low inventory means that a higher than usual demand for real property is coming in the future with each new listing. This could lead to some quick contracts at high prices.
On the other hand, high inventory markets will more than likely take longer to contract out a property and at a much lower selling price. Additionally, inventory can change with the seasons, such as higher inventory in the winter and lower inventory in the summer. This is why in the Hamptons, NY, summer homes typically rent for much more than any other season or area.
All investing is risky, which is why when an investor chooses real property, he should have at least two backup plans in case his first choice does not work. Not having a backup plan could prove to become quite costly, especially for those house flippers who only receive a 10 cent on the dollar profit. Real estate investing is clearly a volatile market; however, investing in the right way can become quite profitable.
Are you interested in real estate investing? If so, be sure to visit my site to learn more about choosing the right investment property.
Article Source: http://EzineArticles.com/?expert=Tony_Hodgison
http://EzineArticles.com/?Real-Estate-Investing---What-You-Should-Know-to-Reduce-Your-Risk&id=4721117
When the recession became a real problem to the economy, the real estate market was the hardest hit in terms of investment properties. The value of homes and other property types plummeted quickly and drastically. Homes that were valued in the millions of dollars were now sitting at an all time low of barely six figures. Now that the recession has lifted somewhat, what does that mean for investing in real property?
The current market, while still volatile, is starting to recover. However, because it is still volatile and any investment can take a turn for the worse, learning the best techniques for the specific market you are hoping to be investing in is necessary. Some basic knowledge is needed to invest wisely because doing so can net some large profit margin success stories; however, doing so the wrong way or with too much risk involved can leave an investor with nothing.
Understanding the local trends is the first step to safe real estate investing. Knowing what the target area is doing and how sales are trending is essential, as well as knowing what other investors are getting from the same market. What has the average investment in the local property been going for? How long are the properties sitting on the market? How many have gone to auction?
While these are just basic questions, the answers to them can help determine the outcome and garner a successful investment. The answers are called market indicators and they are used to help the investor make a proper decision about investing in a property or not.
Another thing to consider when investing in real estate is the amount of inventory involved and the trends involved. Low inventory means that a higher than usual demand for real property is coming in the future with each new listing. This could lead to some quick contracts at high prices.
On the other hand, high inventory markets will more than likely take longer to contract out a property and at a much lower selling price. Additionally, inventory can change with the seasons, such as higher inventory in the winter and lower inventory in the summer. This is why in the Hamptons, NY, summer homes typically rent for much more than any other season or area.
All investing is risky, which is why when an investor chooses real property, he should have at least two backup plans in case his first choice does not work. Not having a backup plan could prove to become quite costly, especially for those house flippers who only receive a 10 cent on the dollar profit. Real estate investing is clearly a volatile market; however, investing in the right way can become quite profitable.
Are you interested in real estate investing? If so, be sure to visit my site to learn more about choosing the right investment property.
Article Source: http://EzineArticles.com/?expert=Tony_Hodgison
http://EzineArticles.com/?Real-Estate-Investing---What-You-Should-Know-to-Reduce-Your-Risk&id=4721117
Thursday, August 26, 2010
When Interest Rates Rise, is There Any Protection For a Buy to Let Landlord?
By Amanda Parkin
As a buy to let landlord in the UK you may have mortgages on some or all of your properties.
It's not uncommon for property landlords to opt for buy to let interest only mortgages to maximize their tax position and given rental income tends to be a regular amount, buy to let fixed rate mortgages are also popular.
Historically a buy to let landlord would probably have remortgaged at the end of a buy to let fixed mortgage onto another similar deal.
Many buy to let mortgage holders have indeed reached the end of their preferential interest rate deal recently but have found that in the current financial climate re-mortgaging to a new buy to let fixed deal is not always possible.
Property landlords are no doubt keeping an eye on base rate predictions and with limited re-mortgage choices many are concerned as to what the future has in store.
Going back only a couple of years the buy to let LTV was more generous than today with buy to let landlords able to borrow up to 85% of the value of their rental property whereas the maximum buy to let LTV is now only 75%.
Whilst many property landlords enjoy the security a buy to let fixed rate mortgage brings, many of them are no doubt currently enjoying lower monthly mortgage payments especially if their mortgage has reverted to somewhere in the region of 2% above Bank of England base rate.
If this is you, what should you do next?
The first step would be to talk to an experienced financial mortgage advisor to review your options. For mortgage brokers to help it's advisable to have a clear picture of your portfolio in terms of how much rental income each property generates, the outstanding mortgage balance on each property and an up to date idea of the current value of each property.
This information will allow your mortgage broker to assess your options with you. It may be that remortgaging onto a new buy to let fixed rate mortgage is possible and the decision then is just whether you want to take up this option or continue to take advantage of the current low interest rate.
The question is, how much would interest rates have to rise by before it became impossible for you to maintain your mortgage payments?
The interest rate on buy to let fixed rate mortgages is currently around 5% with establishment costs of anything between 2% and 3.5% so it's not a cheap solution, but it will give you piece of mind that when interest rates rise, you are protected at least during your fixed rate period.
It may be that a review with your mortgage broker to highlight your options shows that a re-mortgage is not an option.
If your buy to let LTV is greater than 75% you will be very unlikely to find a lender to offer a mortgage.
If this is the case but you are still worried about the effects of an interest rate rise, there is another option.
There is an insurance policy available which can protect mortgage payments from rising interest rates without the need to re-mortgage.
If the Bank of England base rate rises, causing mortgage payments to increase, this insurance policy will pay out to cover some of the increase for up to two years.
This has been a very welcomed option for many buy to let landlords offering stability where previously a high degree of uncertainty was forecast.
This insurance policy will effectively cap your existing mortgage interest rate for a period of two years so you will know, irrespective of what the base rate does, what your worse case payments could be.
For full details about this rate guarding policy or to review your existing buy to let mortgage arrangements contact one of the advisors at equate free on 0800 038 0098 or visit http://www.equatemortgages.co.uk/.
Equates advisors are very experienced in the buy to let mortgage sector and are happy to talk to any property landlords irrespective of the portfolio size.
Review your circumstances now and regain control of what the future has in store.
Article Source: http://EzineArticles.com/?expert=Amanda_Parkin
http://EzineArticles.com/?When-Interest-Rates-Rise,-is-There-Any-Protection-For-a-Buy-to-Let-Landlord?&id=4000505
As a buy to let landlord in the UK you may have mortgages on some or all of your properties.
It's not uncommon for property landlords to opt for buy to let interest only mortgages to maximize their tax position and given rental income tends to be a regular amount, buy to let fixed rate mortgages are also popular.
Historically a buy to let landlord would probably have remortgaged at the end of a buy to let fixed mortgage onto another similar deal.
Many buy to let mortgage holders have indeed reached the end of their preferential interest rate deal recently but have found that in the current financial climate re-mortgaging to a new buy to let fixed deal is not always possible.
Property landlords are no doubt keeping an eye on base rate predictions and with limited re-mortgage choices many are concerned as to what the future has in store.
Going back only a couple of years the buy to let LTV was more generous than today with buy to let landlords able to borrow up to 85% of the value of their rental property whereas the maximum buy to let LTV is now only 75%.
Whilst many property landlords enjoy the security a buy to let fixed rate mortgage brings, many of them are no doubt currently enjoying lower monthly mortgage payments especially if their mortgage has reverted to somewhere in the region of 2% above Bank of England base rate.
If this is you, what should you do next?
The first step would be to talk to an experienced financial mortgage advisor to review your options. For mortgage brokers to help it's advisable to have a clear picture of your portfolio in terms of how much rental income each property generates, the outstanding mortgage balance on each property and an up to date idea of the current value of each property.
This information will allow your mortgage broker to assess your options with you. It may be that remortgaging onto a new buy to let fixed rate mortgage is possible and the decision then is just whether you want to take up this option or continue to take advantage of the current low interest rate.
The question is, how much would interest rates have to rise by before it became impossible for you to maintain your mortgage payments?
The interest rate on buy to let fixed rate mortgages is currently around 5% with establishment costs of anything between 2% and 3.5% so it's not a cheap solution, but it will give you piece of mind that when interest rates rise, you are protected at least during your fixed rate period.
It may be that a review with your mortgage broker to highlight your options shows that a re-mortgage is not an option.
If your buy to let LTV is greater than 75% you will be very unlikely to find a lender to offer a mortgage.
If this is the case but you are still worried about the effects of an interest rate rise, there is another option.
There is an insurance policy available which can protect mortgage payments from rising interest rates without the need to re-mortgage.
If the Bank of England base rate rises, causing mortgage payments to increase, this insurance policy will pay out to cover some of the increase for up to two years.
This has been a very welcomed option for many buy to let landlords offering stability where previously a high degree of uncertainty was forecast.
This insurance policy will effectively cap your existing mortgage interest rate for a period of two years so you will know, irrespective of what the base rate does, what your worse case payments could be.
For full details about this rate guarding policy or to review your existing buy to let mortgage arrangements contact one of the advisors at equate free on 0800 038 0098 or visit http://www.equatemortgages.co.uk/.
Equates advisors are very experienced in the buy to let mortgage sector and are happy to talk to any property landlords irrespective of the portfolio size.
Review your circumstances now and regain control of what the future has in store.
Article Source: http://EzineArticles.com/?expert=Amanda_Parkin
http://EzineArticles.com/?When-Interest-Rates-Rise,-is-There-Any-Protection-For-a-Buy-to-Let-Landlord?&id=4000505
Wednesday, August 25, 2010
Buy to Let Landlord Insurance and Standard Home Cover
By Richard A Burgess
If you purchased your let property as a buy to let, you may see it purely as a business investment. However, if you have rented out a house you used to live in, it may not be immediately apparent that you need specific buy to let landlord insurance.
However, if you let your property and subsequently have to claim on your insurance policy, you may find that the insurer may refuse to pay out if you have not notified them of the change in the nature of the occupation.
How does standard home cover differ from landlord's insurance?
Buy to let landlord's insurance may be different from standard home cover because the risk profile of a let property may be deemed to be different.
What happens if the property is empty?
If the property falls empty, whether you are a landlord or an owner-occupier, you may need to inform your insurers if it is vacant for 30 days or more. This is because the nature of the property changes again in the insurer's eyes, because it becomes an unoccupied property which then needs unoccupied property insurance.
Vacant property may be more at risk from vandalism, and may also suffer more than occupied property from damage caused by fire or flood. The sooner fire or flood damage is repaired the better, but the trouble with a vacant property is that by definition there is no one on site to deal with these problems or call for some help.
What else do you have to consider?
Whilst buy to let landlord insurance may be different in some ways to standard home buildings and contents cover, there are some similarities. For example, you may wish to consider:
Article Source: http://EzineArticles.com/?expert=Richard_A_Burgess
http://EzineArticles.com/?Buy-to-Let-Landlord-Insurance-and-Standard-Home-Cover&id=4769196
If you purchased your let property as a buy to let, you may see it purely as a business investment. However, if you have rented out a house you used to live in, it may not be immediately apparent that you need specific buy to let landlord insurance.
However, if you let your property and subsequently have to claim on your insurance policy, you may find that the insurer may refuse to pay out if you have not notified them of the change in the nature of the occupation.
How does standard home cover differ from landlord's insurance?
Buy to let landlord's insurance may be different from standard home cover because the risk profile of a let property may be deemed to be different.
What happens if the property is empty?
If the property falls empty, whether you are a landlord or an owner-occupier, you may need to inform your insurers if it is vacant for 30 days or more. This is because the nature of the property changes again in the insurer's eyes, because it becomes an unoccupied property which then needs unoccupied property insurance.
Vacant property may be more at risk from vandalism, and may also suffer more than occupied property from damage caused by fire or flood. The sooner fire or flood damage is repaired the better, but the trouble with a vacant property is that by definition there is no one on site to deal with these problems or call for some help.
What else do you have to consider?
Whilst buy to let landlord insurance may be different in some ways to standard home buildings and contents cover, there are some similarities. For example, you may wish to consider:
- what terms and conditions there are. Some insurers may insist that property owners must fit certain door and window locks to show that they have taken steps to prevent break in;
- what exclusions and limitations there are. They may be particularly pertinent if contents are included, as some insurers may have limits on the amounts that can be claimed for single items; and
- what the claims procedure is. Whilst the best case scenario is that you never have to make a claim on your buy to let landlord insurance, it may be a good idea to keep the documents to hand just in case!
Article Source: http://EzineArticles.com/?expert=Richard_A_Burgess
http://EzineArticles.com/?Buy-to-Let-Landlord-Insurance-and-Standard-Home-Cover&id=4769196
Saturday, August 21, 2010
Top 5 Ways to Learn Real Estate Investing In an Easy Way
By Rakesh Sharma Jack
There are many ways to learn the real estate market and how to begin investing, but you should start with just a few of them. Say, begin with 5 and then master them, once you have learned the first 5 steps, you may begin to further your education and learn all of the steps. Always start out with the basics and advance your knowledge slowly, but thoroughly.
First of all... start educating yourself by way of reading, you can utilize your local library, the internet and check for any free or low cost seminars in your area. Before getting started, you will want to think about what it is you would like to achieve from your new venture and then list everything down. Think about what you already know about investing in real estate and start from there. Usually we know more than we think about a topic and that makes it easier to take the first step. Always be open to advice from friends, acquaintances and even experts you may come in contact with.
This would also be the time to consider any partners that maybe interested in beginning a new endeavor with you. It is always good to have hand in hand support; it makes any business decision a lot more comfortable to deal with. In addition, having someone to learn with is always easier, especially when you or your partners have the same goals in mind. The first steps you may want to begin with are listed as follows:
1. Begin by finding a Tail seminar: This is where an expert begins to gather updated or even historical information and methods on the real estate market. The usually gather this information from other experts, either new in the market or seasoned. Once they have the experts of interest, they set up seminars, to allow new up and incoming agents to listen in. Even if you are not an agent, you can attend the seminars and begin your education.
2. Find an expert for advising: Try to find an expert who is willing to be your mentor. With a mentor, you will build up the confidence and education that is needed to begin your new trade. Remember that an expert may have a lot of knowledge, but they too began at the bottom and they will usually train you based on that.
3. Follow a well-known system: There are many systems out there for real estate investing and some maybe very helpful in getting you started. I am not saying to go spend a lot of money on some real estate kit for beginners, but at least check out what the systems have to offer and if it would be easier for you to purchase a kit, then do so.
4. Take advantage of the current economy: Normally this would not be listed as one of the top ways to learn real estate investing, but due to these economical times; it has become one of the main ways to invest. Research the foreclosure market; you will be amazed how many properties have been foreclosed on and repoed. These properties are usually placed back on the market at amazingly low rates and can even be obtained through auctioning.
5. Understand the market through locality: No what areas are hot and which areas are not. This means property value is not always based on the structure itself, but also on the area; which the structure is located. If the structure in near an ocean or a lake, you will have higher property value. Most people love beautiful scenery and if a property provides that, most people will find some way to afford it. You will even have people that purchase properties based on schools in the area or even entertainment.
Always remember there are always different ways to begin investing, but you have to start small and be smart about what you are learning and how to apply what you have learned.
Rakesh Sharma Jack is a freelance copywriter, article ghost writer, SEO writer and eBook expert based in India with more than 10 years of experience. He has written dozens of eBooks, hundreds of research reports and thousands of articles on various topics. To know more about him and his services, please visit: http://aurumwriters.com/.
Article Source: http://EzineArticles.com/?expert=Rakesh_Sharma_Jack
http://EzineArticles.com/?Top-5-Ways-to-Learn-Real-Estate-Investing-In-an-Easy-Way&id=4816464
There are many ways to learn the real estate market and how to begin investing, but you should start with just a few of them. Say, begin with 5 and then master them, once you have learned the first 5 steps, you may begin to further your education and learn all of the steps. Always start out with the basics and advance your knowledge slowly, but thoroughly.
First of all... start educating yourself by way of reading, you can utilize your local library, the internet and check for any free or low cost seminars in your area. Before getting started, you will want to think about what it is you would like to achieve from your new venture and then list everything down. Think about what you already know about investing in real estate and start from there. Usually we know more than we think about a topic and that makes it easier to take the first step. Always be open to advice from friends, acquaintances and even experts you may come in contact with.
This would also be the time to consider any partners that maybe interested in beginning a new endeavor with you. It is always good to have hand in hand support; it makes any business decision a lot more comfortable to deal with. In addition, having someone to learn with is always easier, especially when you or your partners have the same goals in mind. The first steps you may want to begin with are listed as follows:
1. Begin by finding a Tail seminar: This is where an expert begins to gather updated or even historical information and methods on the real estate market. The usually gather this information from other experts, either new in the market or seasoned. Once they have the experts of interest, they set up seminars, to allow new up and incoming agents to listen in. Even if you are not an agent, you can attend the seminars and begin your education.
2. Find an expert for advising: Try to find an expert who is willing to be your mentor. With a mentor, you will build up the confidence and education that is needed to begin your new trade. Remember that an expert may have a lot of knowledge, but they too began at the bottom and they will usually train you based on that.
3. Follow a well-known system: There are many systems out there for real estate investing and some maybe very helpful in getting you started. I am not saying to go spend a lot of money on some real estate kit for beginners, but at least check out what the systems have to offer and if it would be easier for you to purchase a kit, then do so.
4. Take advantage of the current economy: Normally this would not be listed as one of the top ways to learn real estate investing, but due to these economical times; it has become one of the main ways to invest. Research the foreclosure market; you will be amazed how many properties have been foreclosed on and repoed. These properties are usually placed back on the market at amazingly low rates and can even be obtained through auctioning.
5. Understand the market through locality: No what areas are hot and which areas are not. This means property value is not always based on the structure itself, but also on the area; which the structure is located. If the structure in near an ocean or a lake, you will have higher property value. Most people love beautiful scenery and if a property provides that, most people will find some way to afford it. You will even have people that purchase properties based on schools in the area or even entertainment.
Always remember there are always different ways to begin investing, but you have to start small and be smart about what you are learning and how to apply what you have learned.
Rakesh Sharma Jack is a freelance copywriter, article ghost writer, SEO writer and eBook expert based in India with more than 10 years of experience. He has written dozens of eBooks, hundreds of research reports and thousands of articles on various topics. To know more about him and his services, please visit: http://aurumwriters.com/.
Article Source: http://EzineArticles.com/?expert=Rakesh_Sharma_Jack
http://EzineArticles.com/?Top-5-Ways-to-Learn-Real-Estate-Investing-In-an-Easy-Way&id=4816464
Friday, August 20, 2010
Reducing the Risks of Buy to Let
By John Keynes
Investors in residential property, known in the UK as "buy to let", generally put their money in this asset class because they view it as lower risk than buying shares on the stock market. Yet without proper landlords insurance and the right buy to let mortgage, the risks of this asset class may in fact exceed those of others that are generally perceived as riskier.
The main reason for the inherent riskiness is that a residential property investor is taking not only market risk, which is the worry that property prices or rentals may decline, but they also take on a range of additional risks. Foremost among these is interest-rate risk. Most buy to let investors in the UK take out interest-only variable rate mortgages. This sort of mortgage generally has the lowest monthly repayments and is the most efficient from the perspective of tax planning. But it does leave the property investor at the mercy of prevailing interest rates. With official central bank policy rates so low at the moment, many people are short-sightedly overlooking the fact that central banks will start to tighten monetary policy once the world economy stabilises or at the first sign of inflation returning.
A second category of risks relates to idiosyncratic risk. If one was to buy shares in only a single company on the stock market then one would be exposed to the risk that the company was run by crooks and had cooked its books, for instance. It is for this reason that most rational stock market investors buy shares in 50-100 companies. If one turns out to be a bad apple then the impact on the overall portfolio will be minimal.
Yet when it comes to buy to let property investing, many amateur landlords have only one or perhaps two properties. Trouble such as unexpected maintenance bills, tenants who don't pay their rent or who damage the property can cause immense financial loss.
In both instances landlords can insure themselves to some extent against these risks. In the case of interest-rate risk it is possible, for a price, to obtain a mortgage with a fixed rate of interest. These are generally fixed for periods of three to five years, but some with longer fixed terms are available. The trade off for the certainty that they provide is that they cost somewhat more than variable rate mortgages.
A range of landlords insurance policies are also available that help cover many of the idiosyncratic risks involved in leasing property. Buy to let home insurance policies will often include cover for deliberate damage to the property. Options include legal expenses cover, to cover the costs of evicting tenants and rent guarantee cover, under which the insurance firm will pay the rent that would have been received should tenants abscond or stop paying their rent.
A sensible buy to let investor will carefully consider the range of buy to let mortgages and look at several landlords insurance policies to ensure that their investment is indeed as low-risk as they had hoped it would be.
You can read more about landlords insurance and and fixed rate mortgages by clicking on the above links.
Article Source: http://EzineArticles.com/?expert=John_Keynes
http://EzineArticles.com/?Reducing-the-Risks-of-Buy-to-Let&id=3662138
Investors in residential property, known in the UK as "buy to let", generally put their money in this asset class because they view it as lower risk than buying shares on the stock market. Yet without proper landlords insurance and the right buy to let mortgage, the risks of this asset class may in fact exceed those of others that are generally perceived as riskier.
The main reason for the inherent riskiness is that a residential property investor is taking not only market risk, which is the worry that property prices or rentals may decline, but they also take on a range of additional risks. Foremost among these is interest-rate risk. Most buy to let investors in the UK take out interest-only variable rate mortgages. This sort of mortgage generally has the lowest monthly repayments and is the most efficient from the perspective of tax planning. But it does leave the property investor at the mercy of prevailing interest rates. With official central bank policy rates so low at the moment, many people are short-sightedly overlooking the fact that central banks will start to tighten monetary policy once the world economy stabilises or at the first sign of inflation returning.
A second category of risks relates to idiosyncratic risk. If one was to buy shares in only a single company on the stock market then one would be exposed to the risk that the company was run by crooks and had cooked its books, for instance. It is for this reason that most rational stock market investors buy shares in 50-100 companies. If one turns out to be a bad apple then the impact on the overall portfolio will be minimal.
Yet when it comes to buy to let property investing, many amateur landlords have only one or perhaps two properties. Trouble such as unexpected maintenance bills, tenants who don't pay their rent or who damage the property can cause immense financial loss.
In both instances landlords can insure themselves to some extent against these risks. In the case of interest-rate risk it is possible, for a price, to obtain a mortgage with a fixed rate of interest. These are generally fixed for periods of three to five years, but some with longer fixed terms are available. The trade off for the certainty that they provide is that they cost somewhat more than variable rate mortgages.
A range of landlords insurance policies are also available that help cover many of the idiosyncratic risks involved in leasing property. Buy to let home insurance policies will often include cover for deliberate damage to the property. Options include legal expenses cover, to cover the costs of evicting tenants and rent guarantee cover, under which the insurance firm will pay the rent that would have been received should tenants abscond or stop paying their rent.
A sensible buy to let investor will carefully consider the range of buy to let mortgages and look at several landlords insurance policies to ensure that their investment is indeed as low-risk as they had hoped it would be.
You can read more about landlords insurance and and fixed rate mortgages by clicking on the above links.
Article Source: http://EzineArticles.com/?expert=John_Keynes
http://EzineArticles.com/?Reducing-the-Risks-of-Buy-to-Let&id=3662138
Thursday, August 19, 2010
Buy to Let Investments - Secret Strategies
By I Clark
If you are looking for good buy to let investments in the UK, you may be wondering where you can find a suitable property that you can find financing for. This market is not quite as easy to enter as it was not too long ago, when almost anyone could get a loan from a company that specialised in buy to let. You can still find good opportunities in this area, but you have to do a little more digging now.
The Value of Networking
You don't necessarily have to find a house or building that is being marketed as a buy to let property. You simply have to find a property that would be suitable for that use. What you are really looking for is a good property in the right location that people would want to let.
Word of mouth can be one of the best ways to find properties. Networking is an overused word, but it can be a valuable tool in your search. Simply let people know that you are looking for a particular type of property. You don't have to do this in an aggressive manner; just casually mention it to as many people as you can. Try to make contact with as many social circles as you can. This can include relatives, where you work, social activities, gyms, even online forums. Again, don't spam the internet with requests, but do drop hints to people you are already talking to.
Searching on Foot
In today's economy, many people are anxious to sell their homes, buildings and flats. Some of these people may be listed with real estate agents, but some are not. Some advertise, but some may only put a sign in front of their property. If you find a neighborhood you like, you might take the time to walk or drive around and look for "For Sale" signs.
If you are more aggressive, you might even knock on doors. If you find a house you like that is not, as far as you know, listed as available, it would be better not to make an offer to the owner. Politely inquire if he or she knows of any buildings that might be for sale in the area and hand them a card. You just may find someone who has been considering the idea of selling but hasn't yet put their property on the market. This can be the best way to find good values.
Remember the Fundamentals
No matter what creative way you conduct your search for that perfect buy to let investment property, you have to keep the fundamentals in mind. Just because someone is willing to sell their house at a good price does not mean you should buy it. Do research on the local economy and the likely future of the neighborhood.
The location must be convenient and desirable to people who need a place to let. The building must be in good condition, unless you are someone who can do your own renovations (or it's reasonable enough that you can afford to hire someone to do the work).
These are some tips to help you start thinking creatively in your search for good UK buy to let investments. The opportunities are still out there --you just have to be willing to search for them.
Ian Clark is a real estate consultant and advisor in UK. He has extensive experience in all aspects of Real Estate Investment built over 20 years . He is also the Director of Midas Estates, an online real estate website offering property investment opportunities in UK and overseas. Midas Estates is a property investment company who also deals with Buy To Let Investments with an aim to provide maximum capital growth for the clients as the majority of the clients are looking to secure financial security in the shortest time possible. Ian's honest presentation of the real estate investing business, including both profit and risks is respected for his sincere, candid approach. He is highly regarded as one of the most sound, dependable source for the specifics behind the sometimes tricky and exigent facets of real estate investing.
To get more information and for a 30 minute no obligation absolutely free consult in how to make your property investment strategies work log on to http://www.midasestates.com/buy-to-let
Article Source: http://EzineArticles.com/?expert=I_Clark
http://EzineArticles.com/?Buy-to-Let-Investments---Secret-Strategies&id=1603763
If you are looking for good buy to let investments in the UK, you may be wondering where you can find a suitable property that you can find financing for. This market is not quite as easy to enter as it was not too long ago, when almost anyone could get a loan from a company that specialised in buy to let. You can still find good opportunities in this area, but you have to do a little more digging now.
The Value of Networking
You don't necessarily have to find a house or building that is being marketed as a buy to let property. You simply have to find a property that would be suitable for that use. What you are really looking for is a good property in the right location that people would want to let.
Word of mouth can be one of the best ways to find properties. Networking is an overused word, but it can be a valuable tool in your search. Simply let people know that you are looking for a particular type of property. You don't have to do this in an aggressive manner; just casually mention it to as many people as you can. Try to make contact with as many social circles as you can. This can include relatives, where you work, social activities, gyms, even online forums. Again, don't spam the internet with requests, but do drop hints to people you are already talking to.
Searching on Foot
In today's economy, many people are anxious to sell their homes, buildings and flats. Some of these people may be listed with real estate agents, but some are not. Some advertise, but some may only put a sign in front of their property. If you find a neighborhood you like, you might take the time to walk or drive around and look for "For Sale" signs.
If you are more aggressive, you might even knock on doors. If you find a house you like that is not, as far as you know, listed as available, it would be better not to make an offer to the owner. Politely inquire if he or she knows of any buildings that might be for sale in the area and hand them a card. You just may find someone who has been considering the idea of selling but hasn't yet put their property on the market. This can be the best way to find good values.
Remember the Fundamentals
No matter what creative way you conduct your search for that perfect buy to let investment property, you have to keep the fundamentals in mind. Just because someone is willing to sell their house at a good price does not mean you should buy it. Do research on the local economy and the likely future of the neighborhood.
The location must be convenient and desirable to people who need a place to let. The building must be in good condition, unless you are someone who can do your own renovations (or it's reasonable enough that you can afford to hire someone to do the work).
These are some tips to help you start thinking creatively in your search for good UK buy to let investments. The opportunities are still out there --you just have to be willing to search for them.
Ian Clark is a real estate consultant and advisor in UK. He has extensive experience in all aspects of Real Estate Investment built over 20 years . He is also the Director of Midas Estates, an online real estate website offering property investment opportunities in UK and overseas. Midas Estates is a property investment company who also deals with Buy To Let Investments with an aim to provide maximum capital growth for the clients as the majority of the clients are looking to secure financial security in the shortest time possible. Ian's honest presentation of the real estate investing business, including both profit and risks is respected for his sincere, candid approach. He is highly regarded as one of the most sound, dependable source for the specifics behind the sometimes tricky and exigent facets of real estate investing.
To get more information and for a 30 minute no obligation absolutely free consult in how to make your property investment strategies work log on to http://www.midasestates.com/buy-to-let
Article Source: http://EzineArticles.com/?expert=I_Clark
http://EzineArticles.com/?Buy-to-Let-Investments---Secret-Strategies&id=1603763
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