4 Secrets of a Good Buy-to-Let Investment

Category Buying

4 Secrets of a Good Buy-to-Let Investment

For first-time home buyers, it can be a daunting task to buy property only to let it out. 

As with any investment, you expect it to make money from the onset. This might generally be the case, but this does not mean that mistakes have not been made - mistakes that could have been avoided with the right guidance. 

Anyone considering a buy-to-let property must do adequate research before taking the plunge, especially if you are focused on holidaymakers. Just because a seaside view looks attractive does not mean that the holiday market in the area is doing very well. 

Here are a few tips to take into consideration when investing in buy-to-let property: 

1. Rental income

This is the most obvious and important factor that buyers need to take into account. 

The rent that is charged will differ from area to area, so it is vital to work with your real estate agent if you are unsure what the current standard in the neighbourhood is. 

Scour online property pages and newspapers to get an idea of what the going rate for renting a house in the area is and work out your own rent accordingly. With investments like these, it is important that your rent is affordable but still able to make a profit. 

2. Location

Location always boosts the value of a propertyand thus the rental income. 

Homes situated close to schools and other amenities often command a higher rent than homes in other areas. The type of neighbourhood you choose will also determine the type of tenant you attract. 

Upmarket areas in good areas mostly draw good tenants, whilst run down homes in poorer areas often attract tenants with poor track records. There are, however, exceptions to this rule, so it is important to use your own judgment when meeting your tenants for the first time. 

3. Taxes

Rates and taxes are two factors that should also be investigated by the buyer before investing in a buy-to-let home in a particular area. 

Bond repaymentsare particularly high on recently-bought homes and more often than not, the rental charged will just about cover the monthly instalment on the bond. This means that the expenses will be deducted from the landlord's account and it needs to be taken into consideration before a buying decision is made. 

It is important for the buyer to sit with a professional agent and calculate any costs that will be deducted per month on the house in a specific area. 

4. Crime

Crime happens everywhere and in South Africa, there is unfortunately no escaping it. 

Some areas, however, attract more crime than others. Tenants will be reluctant to live in a crime-infested area and they will not be willing to pay a premium where they feel unsafe or exposed to danger. Because of this the tenant turnover will be higher than normal in an area that is rife with crime. 

This is not only about the tenant's safety, but also the value of your investment. You don't want to invest in a home that is susceptible to break-ins and stealing. 


Rushing to buy a houseis never a good idea and the buyer should always do the necessary homework. Those who take their time before making a decision will come up smiling while those who make decisions in the spur of the moment might end up regretting their mistakes. 

buy-to-let investmentis a great way to make good profit on money loaned from the bank, but it will only be feasible if enough research is done and if the buyer focuses on price ranges where the demand is the highest.

Author: Ikonic Real Estate

Submitted 17 Oct 19 / Views 70