Archive for : January, 2015

Buy to rent – becoming a landlord

Buy to rent refers to buying a property with the intention to rent it out to another party. On the surface this might seem like a very attractive deal. The person who rents your property pays for a significant part of your mortgage, and eventually you end up owning the place, with the freedom to sell it and make a profit on the property. But before you go out and get a second housing loan to buy a new house, there are a few things you need to keep in mind.

First of all, being a landlord takes up a lot of time, so you do have to take that aspect into consideration. Depending of the state of the property you are renting out, you might need to spend quite an amount of time on the maintenance of the building. When there is trouble with the air conditioning or the shower, you need to make sure that you fix the defect, or find someone else to do it for you. Apart from the maintenance, you also need to take care of rent collection and legal aspects related to the buy to rent construction.

If you feel that you don’t have the time to take on all these responsibilities, you can choose to delegate these things to a property management company. However, costs of this service can be quite high, resulting in a lower rental yield. Also, when you have to look for a new tenant because the old resident moved away, you risk a period in which no one is living in your property, meaning that you miss out on rent.

Do you feel that you have the time to take on the role of landlord? Then buy to rent might be a good investment for you. If you have an extremely busy life already and need to outsource the duties that come with being a landlord, you might want to reconsider this plan.