The type of property you have, its location, its condition, will very much determine the rent levels that you can charge and the clients that you will attract.

Financial Considerations

It's important to buy the right property in the right area to maximise both rental income and capital growth. The type of rent that you might expect to achieve will be around 5-10% of the value of the property, although your eventual profit will be determined your mortgage payments and other outgoings. If income rather than capital growth is your major concern, you may be better off buying in an unfashionable area where prices are low and yields are high, but capital growth is relatively low.

Identifying Your Market

There are clearly a number of different markets when it comes to people who rent. There are those who are younger and less well-off, possibly needing to share, but more likely to need more intensive management than older, more professional people who can afford a higher rent but want more for their money. Before buying a property to let, it's important to identify your ideal tenant and to ensure that there's a demand for rental properties in the area where you plan to buy.

High yields can be gained by letting to students sharing a property, but this must be balanced against the fact that they will almost certainly not take care of the property, and may leave it in a terrible state. Consequently, most landlords prefer to let to a business or to professionals with steady jobs.

Getting the Basics Right

Make sure that you are emotionally detached and buy something that appeals to your target market, rather than to you. Any property you choose has the right qualities, such as being in a good area and close to public transport, major roads and amenities such as shops, pubs, restaurants, parks and sports facilities. If possible, it should also have off-road parking and a peaceful, secure location.

Prospective tenants often have a huge number of properties to choose from, so make yours different, and consequently, more desirable. Buy a property with strong selling points such as a huge lounge, a terrace, a garage or off-road parking, wonderful views, a beautiful kitchen or a luxurious bathroom with a Jacuzzi and power shower.

Property Types

City

If you are considering letting within a city, a one-bedroom apartment will give you the best rental prospect, and will give you an average let length of around six months to a year. Competition for high quality apartments is usually fierce, and so yours must be well equipped, well decorated and very well furnished, with all mod cons if you want to command a high rent.

Rural and Suburban

Houses are the best bet for the rural or suburban market, where they are much more likely to attract long-term tenants - the average stay of a tenant in house is approximately two and a half years. Rooms should be well proportioned, well lit and preferably south facing. ...