Becoming a landlord has never been easier. People like the idea of collecting virtually guaranteed income from tenants and an inflation proof asset. But is it quite that simple?

Some property people work on the belief that you need to attain an increase of 8-10% in value on your property to make the deal worthwhile. While others, look at the potential gross income yield in order to work out the viability of a deal. These "experts" are part of the reason that investing in property has become such a hot proposition. "Buying to Let" has become a popular route to plan for the future and opens the opportunity to create wealth without employing fund managers or pension providers.

Pensions and Unit Trusts have traditionally been the first port of call when investing capital. However, investors are increasingly more likely to use their cash as a deposit on one or maybe more properties to let out.

There are many pitfalls to letting property and many considerations should be made before potential landlords proceed —

• If the property is not let for a period of time there may still be a mortgage to pay. This could easily occur and commonly happens between tenants, or if the rental market becomes over supplied in a particular area.
• If your tenants leave the place damaged or in a mess, you could be left carrying the can. You may have a deposit from these people, but it may not always cover all of the damage that they could cause.
• You should treat the property as a business and budget accordingly. You may have to cover insurances for the buildings, essential repairs and professional agent's costs. This money has to come from somewhere and will be taken from the gross rent before you receive your profit.

Top Tips – Finding Property

• Always look for property close to local amenities and shops.
• Make sure a transport network is close by, especially for commuting into and around major cities.
• University towns and cities could have a ready made market. Check with local Colleges and Universities - they may have special contracts on offer for landlords.
• Always check the local letting market in the area that you're looking to buy. Compare the rental yields by talking to at least three agents. Look at the local press classifieds to establish if there is a market in a particular area.

Finding Good Tenants

• Decide "What makes a good tenant" before you interview anyone. If they don't meet your criteria then let them go!!! Never compromise!!! Professional people, male or female, smokers or non smokers etc.
• Consider the amount of deposit that you require. If a tenant has not been able to save a deposit how likely are they to consistently pay the rent?
• Use a property tenancy agreement. This protects the interests of all parties.
• Always request references and make sure you take them up.
• Insist on rent paid by standing order into your bank account
• Use an established letting agent to manage the property. Why not use a gay letting agency to find tenants for you. (After all we are cleaner, neater, tidier, more respectful and nicer people all over). Once you employ an agent it would be wise to check if they are doing their job properly now and then.

Finance

If you still think Bricks and Mortar to be a good investment then you should select a lender that is going to be happy with the idea of a let property. There are many specialist schemes that would allow a commercial proposition. If you try to let a property that is secured against a residential mortgage then you could end up invalidating the Buildings Insurance.

Providing you have sufficient cash deposit, some lenders will approve finance without looking at your personal earnings. They will treat these deals as self-supporting. Providing the projected rental income exceeds the interest payable on the loan they will advance funds. They normally look for coverage of 125-150%. Interest rates tend to be slightly higher than residential mortgages due to the commercial nature of the transaction. "Buy to Let" mortgages tend to carry additional arrangement fees from the lender and are normally charged at between 0.5%-1%. This probably seems expensive, but you should remember that residential lenders would not provide finance for a whole string of properties.

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