Many investors spend time and take consideration of the initial cost of a property and how the money will be raised to fund the purchase, but totally overlook the further more costs that will have to be enclosed. The standard costs can make a viable project become a nightmare!



The extra costs





Most of us know exactly the costs involved of running our own homes. There are so many additional costs involved in buy to let which totally must be planned for, in order to get a successful outcome..



Your tenants will be liable to bills such as council tax, water rates and utility bills including electricity and gas, landlords normally do not include regular costs such as council tax as part of the rent. It can be an advantage; tenants like the certainty of having some bills included as it allows them to budget accurately; as a landlord you are then sure that a council tax bill will have been paid. Even though it is the resident tenant who is in charge for the council tax bill, collecting monthly repayments from tenants who have moved on would leave the landlord with a possible liability to prevent fines. A related rule applies with water and sewerage charges and this type of bill is often included as part of the rent.



Another factor, which should be thought about, is insurance, this an additional cost to. As a landlord the two main insurances which you should bare in mind are buildings insurance and public liability insurance. If the property has a structural problem such as fire or flooding all will be covered through the insurance policy and will cover you if your tenants are injured in your property and try to claim compensation thorough you.



Expenses below are just a few which should be taken into consideration:



- 10 percent of the purchase price in case of additional one-off expenses;

-Through the month, between 10 - 20 percent of income is taken by the agent for managing the property;

-5 percent each year of income for repair and maintenance; further more

-7 percent of income annually for void periods.



Key points



-Good budgeting will guarantee that the buy to let property is an ongoing success;

-additional costs should be planned;

-Try give your property to an agent, this will save loads of hassle.