• Is property the best way to invest for you?
‍While buy to let can be very profitable, it is a long-term investment that will require you to tie up your money for longer than most other types of financial investment. It will also require ongoing capital input for maintenance and repairs and careful professional management, and it attracts higher capital gains tax than other asset classes.

So, before you buy any property, speak to an independent financial adviser or wealth manager who can help you understand your future financial needs and compare different returns when investing your money and work out whether property is the right vehicle for you.

• What are the tax implications?
‍Property tax can be particularly complicated, and you need to understand when and how you will pay tax on your profits in order to work out what net returns your investment will deliver over time.

A sensible approach is to consult a property tax specialist who can help you understand your tax obligations – including considering how rental income will impact your personal tax bracket and any benefits you receive, and what will happen when you come to sell or pass on the property. Then you can ensure you own any property and take income in the most tax-efficient way.

• Is there solid demand for this particular type of rental property?
For buy to let to be a success, you have to invest in a property that lets well to reliable tenants, who are willing and able to pay a good market rent. That means you need to buy something for which there is high demand today, and likely to be good demand and a limited supply into the future.

The best way to find out about tenant demand is to speak to good local letting agents that have worked in the area for at least 10 years and ask them what type of property in which locations they need more of. You can also check sites like Rightmove to see how many of a particular type of property are available versus those that are ‘let agreed’, and track them over a period of a few weeks to see how quickly they let.

• What are the local development plans?
The local authority should have Local Plans available for what new construction and infrastructure improvements are in the pipeline to be delivered over the next 5-10 years. That will give you a good idea of whether the local economy is expanding and the number of new homes that will be built and which properties are in short supply so you can get a picture of whether rental demand and prices are likely to rise.

• Can you let the property the way you want to?
Because local authorities have the power to approve planning applications for HMOs, expand HMO licensing to smaller multi-let properties and introduce licensing schemes for any privately rented home, it’s essential to find out what their policies are before investing. Otherwise, you run the risk of buying a property and only then discovering that you can’t let it as you had intended – e.g. the council may decide there are already too many rented properties in an area, or they may limit the number of permitted occupants.

• Can you buy at below the true market value?
As an investor, you should always aim to buy a property at below its true market value so that you gain instant equity. That will help protect you against future price falls, boost your capital returns, yields and may also improve your budgeted cash flow if it means you can borrow less on a mortgage.

While it’s not always easy to negotiate a discount, if you can find a ‘motivated’ seller – someone who’s more concerned with a quick sale than getting their full asking price – it’s certainly possible to reach a win/win deal.

• Is the property likely to grow in value at more than the rate of inflation?
‍While rental profits might be your priority, it’s important to make sure you buy something that will increase in value at least in line with inflation. So, take advice from local sales experts and check the Land Registry data how prices for your particular type of property in the area have performed over the past 15-20 years, as that is a good indication of how the trend is likely to continue.

• Do you know all the related costs and outgoings for at least the next 5-10 years?
You should have a fairly accurate picture of your likely expenditure before you buy an investment property, so you can properly assess how profitable it will be. That means knowing not only what the monthly and annual related costs are – such as mortgage payments, regular maintenance, gas safety checks and bookkeeping fees – but also what the bigger periodical expenses you need to budget for, such as replacing white goods, redecorating and upgrading fittings.

And although many private tenants now stay in the same home for several years, it’s sensible to factor into your budget 3 weeks of void periods each year, which is roughly the average in England.

• Will the rental income cover all the associated costs and leave you with the profit you want?
‍From a mortgage perspective your lender is likely to require ‘rental cover’ of somewhere between 125% and 145% - i.e. the rental income must be 25% to 45% higher than the monthly mortgage payment. However, that is simply their ‘safety net’ and is no guarantee that the property will be profitable once all the associated costs are taken into account.

That’s why it’s so important to know how much the property will cost to run before you make any commitment to buy – it really should pay for itself ongoing and leave you with enough profit to make it a worthwhile investment for you.

• Can the property be managed cost-effectively?
‍Unless you are planning to become an expert on the legals of letting and managing property and are able to invest the time required to be a hands-on landlord, it is wise to use the services of a professional agent to look after the property on your behalf. Their full management fee is likely to be between 15% and 20% of the rental income, so make sure you check that this still leaves you enough profit for the property to be financially viable for you.