July 6, 2017

Buy-To-Let Guide

Every year around this time people from every walk of life, like to reflect on what practices worked for them during the previous year and look forward with new property goals for the coming year.

With that in mind we thought it would be helpful to propose some property 101 – a back to basic step-by-step  for investors of any level.

Go somewhere quiet & pay close attention

So, the idea of passive income and long term capital growth has started your juices flowing?

You’re fully aware that you won’t be a millionaire by next Saturday, Rodney.
Instead, long-term investing through one of the best leveraged assets makes total sense to you.

You’ve thought about how good quality properties leased to great tenants can provide you with a great income stream. The capital growth could fund your retirement into the sunset..

Which will give you the freedom, choice and profit to pursue the life you want-on your own terms.

But starting out is a bit overwhelming right? I can relate. And in practise, it’s much easier said than done.

You see, while the notion of investing is simple, it’s not easy. There are many pieces of the jigsaw you need to fully understand, especially if you’re just getting started.

This step-by-step buy to let guide will break down in simple straightforward steps the process of investing in buy-to-let for the long term….

Step 1: What resources do you have?

This is the starting point to figure out exactly what resources you have available at your disposal in the pursuit of embarking on your buy-to-let journey.

Available Capital:

Investing in property requires substantial capital. Not just the initial 25% deposit, but additional cash for buying the property, refurbishment, legal fees, stamp duty, void periods and maintenance.

Now if bought correctly, you can recycle the original deposit and use it to purchase the next property, giving you infinite return on investment.

You might need to add value for this strategy to work, but once mastered, you can use the positive cash-flow and any other income from your day job to fund more purchases.

As with anything, there are exceptions to the rule. You can buy property no money down using a combination of joint venture and private finance, but also creative strategies such as delayed completion bridging and 100% finance through bridging financiers.


The Holy grail of your investment acquisitions.  To get the best financing terms for your investment properties requires excellent credit. So have a look at your credit score and, if it’s low, can you raise it?

But also note, before applying for any mortgages make sure that your credit report is up to date and it accurately reflects your circumstances.

If you believe anything is wrong, contact the lender that submitted the disputed information and explain why you disagree, you might need to provide proof.

If you’re right, they’ll amend your report. And if something needs further explanation, for example, if you once missed some payments because of illness or have a reasonable justification, you may be able to get a note added to your credit report that lenders will see when they search it. You may even be able to get some late payments removed if they were a genuine mistake.

Any effort spent towards amending your credit report will be worth its weight in gold later down the road.


At this stage, once your potential roadblocks have been demolished, it would be a good idea to sit down with a mortgage broker and see if you can qualify for a decision in principle.

There’s nothing worse than searching for the perfect property, developing and nuturing relationships with estate agents (or direct to vendor), making a move on a property only to find out you can’t qualify for a mortgage.

Your aim is to eliminate potential threats to your ability to get finance now rather than it costing you a property, time and effort later on.


A strong personal income for any potential purchasers will often prove very beneficial when acquiring buy to let properties


Because when lending guidelines and criteria tighten, it usually means investors having to jump through additional hoops to qualify for a mortgage on the basis of having a minimum income (£20-25k) without solely relying on the rental income exceeding the mortgage payments.

Of course there are exceptions to this: whether you are an existing homeowner, first time landlord or buyer, have other assets, your living expenses etc.

But whatever you do, don’t make the mistakes that many do – quitting their jobs before they’ve completed their acquisitions in their excitement of the ‘real estate riches’ :  You will often find yourself unable to finance anymore properties and won’t have a war of chest funds to dip into.


OK, we all have the same 24 hours in a day, but how you leverage it will determine your property success.

You see, time is a very precious commodity. Two investors, one aged 20 vs someone aged 50 both starting at the same time, means the first investor has a substantial advantage over the second investor.

But the best property model for one may not be the best model for another as there are so many variables.

So start early [buy well] and you can really have your cake and eat it!

Property Knowledge

This is the part where you can really lose your shirt if you’re not prepared.

With the amount of [free] information readily available, there is no excuse not to succeed. Yes, mistakes will be made and battle scars formed, but this will often make you a better investor in the long-run.

Often, we see investors disregard the fundamental knowledge about long term investing and get burned in the process, badly!

Large upfront fees paid to property sources, multiple lemons sold over and over again, letting agents running away with the landlord’s rents, overseas developments seized and going bust, buying off plan, dishonest solicitors swindling property deposits – the list is endless.

But something which could have easily been avoided had they carried out basic due diligence.

As the saying goes, ‘know the business before you step in’.

Step 2: Planning your property journey

“If you don’t risk anything, you risk everything”. Rob Moore

I know sometimes it can be scary, intimidating and even downright overwhelming getting started, but if you aim for nothing, you will hit it all the time.

As Wayne Gretzky say’s “you miss 100% of the shots you don’t take”.

With that in mind, you need to get started with building your property roadmap. This will provide clarity and accelerate your results.
In particular:

  • How much passive income do you need?
  • Which strategies do you need to focus on?
  • How much time do you have?
  • How much capital will be required, whether your own or through private/JV finance?

This is important, as the answers to these questions can save many wasted years of going in the wrong direction. You see, how much passive income you need will depend on each investors individual circumstances.

This can be a set figure now, but as your goals and lifestyle needs change, this figure can be fluid and revised over the years.

The remaining answers to the above questions will depend on your ability to raise finance for a buy and hold type strategy, and the individual market you will be investing in.

Step 3: Finding properties in your target market

Does your local market offer good opportunities for long term buy to let investing? Does it meet your income needs?

Or to put it another way, if you lived in another town, would you invest in that market? If the properties in that town provide good cash-flow, with great yields, then you happen to live in a location where you can make a decent income.

Embrace the opportunities and take advantage.

If the values of properties are high in your area, and the rent is not proportionately high and you are making little to no income, you should look further afield to find high-yielding properties which are suitable to your long term needs.

Once you have the location in mind, you need to break down exactly which type of property and area within the area you will be investing in, particularly which tenants you would like to target.

It’s no good finding a cheap property in a council type area where the majority of tenants are on benefits, and then try to figure out how to find a working tenant, because you ‘don’t deal with the DSS/LHA sector..’

Your desired professional working tenants may not want to live in that location.

You will do well to focus on buying investing properties that your desired tenants want to rent and what you as the investor wants in terms of cash-flow, return, hassle-factor and desires.

Step 4 – Crunch the numbers in a spreadsheet

Investing in your first buy to let deal will be pretty much like how you spent the night with your first love – you will learn so much!

You see, running the numbers through an automated spreadsheet, breaking out a hot sweat as you punch in those numbers, being sceptical and second guessing yourself a lot is all part of the exciting, yet exhilarating journey of a buy to let investor.

But it’s important and it will make you a better investor. You see, it’s crucial to backup and verify that idea about how the potential deal will materialise in real life.
So here’s what you need to do:

1 – Punch in all the relevant figures.

Being conservative with the numbers. Whatever you do, don’t artificially inflate the figures to ‘make the deal work’.

You’re only kidding yourself by sweetening the numbers. Be conservative, but not optimistic with the figures.

2 – Get a second opinion.

Is the deal really that good? Will you still make positive cash-flow if rates spike? How about if rents decrease?

Do you have surplus cash for unexpected eventualities? Leverage knowledge of other investors, as it’s the only way to gain the required confidence to execute subsequent deals.

3 – Start off slow.

But as soon as something works to your required rules, buy, repeat and rinse. I have a saying which goes “Focus like a laser on one thing; and become the best at it” .

Once you get over your fears and buying jitters, your strategy will come to life. Execute subsequent deals with the same focus and discipline, and complete as many acquisitions as fast as possible to reach your passive income goal.

Step 5 – Growing your capital

If you’re buying at great discount or and adding value through refurbishment, you will be able to re-cycle the initial deposit to buy the next property, effectively repeating the process.

However, sometimes, a property can be a great deal because it chunks out a great monthly passive income. You should be using part of this positive cash-flow to build up funds as your capital base for future property acquisitions as well as using any potential profit from property flips to buy more high yielding units.

But if you need to move faster, invest money from your monthly salary, or use a combination of joint venture and private finance to make every potential acquisition.

Step 6 – Enjoy the passive income

As much of the work is front loaded once your properties bring in the desired monthly income you targeted, take a well deserved victory dance and enjoy the fruits of your hard work.

You have now made it. All the blood, sweat and tears has paid off. You set that almighty goal, you built a property roadmap to get there and executed it well.

You now get to reap the huge compounded rewards. You can retire with a cigar and a pina colada  on a hot beach and watch the income roll in…


Step 6a – Explore New Property Strategies

If you’ve built quite a substantial portfolio, you may look at selling a few or remortgaging to explore new options which your equity can now provide i.e. an alternative path with the larger capital base you’ve built up.

Larger assets and strategies that were completely out of your control when you first started are now within your reach.

You now have the option of reaching new heights in your next chapter as a successful property investor by exchanging, exiting some [or all] of your assets to make a larger but more of a strategic move.


Source: Mark Homer (Progressive Property)

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