A buy to let business model works on the basis that a borrower is buying a piece of property with the intention of letting it out to another person rather than living in it personally. Financial institutions and mortgage companies are willing to lend money to buy to let business owners as they know that the business will generate income to service mortgage repayments. Property is a long term investment, therefore it is important to be patient and not become frustrated when the returns don't come as fast as you would like.
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Prepare a strategy. Do your math and determine the cost of the property and how much rent you should charge for the property in order to afford making monthly mortgage repayments. Come up with an action plan in case things do not go as you plan and property prices go down. Where will you find the money to make up the payments?
Get insurance. One of the strategies you can adopt is taking landlord insurance in case tenants fail to make their monthly rent payments. You also have the option of getting unoccupied and empty property insurance. This will ensure that you will still be able to may your repayments to the mortgage company as scheduled even if your tenants do not make payments in time, or the property is not occupied for a period of time.
Find tenants. You need to find tenants for your property as quickly as possible to meet mortgage repayments. The longer the property remains unoccupied, the longer you will have to keep finding other financial sources or forking out money from your own pocket to meet mortgage repayments. You should be able to cover the cost of mortgage payments for each end of the month. Find good tenants who will be willing and able to pay their rent at the end of each month without defaulting. Avoid tenants who may turn out to be problematic and significantly cost you.
Assemble a professional team. As a property owner, you will have many responsibilities. You will be expected to handle anything to do with the property such as ensuring repairs have been done, rent collection, advertising the property, maintenance of property, termination of leases, taking care of legal, insurance and accounting issues. To effectively carry this out, it is advisable to seek the services of other professionals such as accountants, lawyers, real estate agents, property managers, tax advisers and bond originators. Find a team who share the vision of your business and are committed to helping you achieve that vision. That means that it would be important to have a trustworthy and long lasting relationship with each of the professionals.
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