Before you start your search for a property, here's what to consider.
There are 2 ways you can potentially earn a profit from a buy-to-let property:
This is the return you expect to make on the property, through rental income.
You can calculate the rental yield by taking the rental income you'd expect to make in a year, and dividing it by the purchase price. You can then convert the result into a percentage by multiplying it by 100.
For example, if the property costs £250,000 and the predicted rental income is £12,000 a year, the rental yield will be 4.8%.
To get a more accurate picture of the potential return, you may want to take into account any other outgoings, such as any property management fees, insurance and maintenance costs. You may also need to pay tax on any rental income you receive.
A good rental yield can vary depending on a number of factors, including the location. When looking for a buy-to-let abroad, speak to local estate agents and look on property websites for guidance on what rental income you could expect.
There's no guarantee a property will rise in value. But if it does go up, your capital growth is the difference between the price you pay for a property and the price you sell it for. Depending on where you live and where the property is situated, you may need to pay capital gains tax if you do sell a property you're not living in.
Ideally, you'd want a good rental yield and good capital growth potential when looking at properties. Again, if you're buying in another country or territory, speak to local estate agents and use property sites for guidance.
Always seek tax advice as tax rules can change between countries.
Whether you're looking to rent to students, professionals, families or retirees, think about who your target tenant is to help focus your search. Put yourself in their shoes, and ask what you'd be looking for in a rental property.
It's also worth thinking about whether you want to use a property management company. If you're living in a different country or territory, it could make managing the property easier, but you'll need to factor in their fees.
Depending on the property management company you choose, they may be able to help find and vet potential tenants for you, manage the tenancy and collect the rent.
When searching for the right buy-to-let, location is important - you want to find somewhere people want to live. When searching for a property, consider:
Whether you're buying in a different country or territory to the one you're living in, or you're buying close to home, a property management company may be able to provide this information.
Some properties may be tenant ready, while others may need fixing up first. Deciding what type of property you want before you start looking can help narrow down your search.
If you do need to do some work before you can rent the property out, it could affect your profit margins. It'll also mean you won't be receiving any rental income for a while, so make sure to consider this.
If you have a mortgage on your buy-to-let, you want to avoid having long periods of time without any rental income. So it's important to consider the demand for renting the property, alongside the location.
The country or territory you plan to rent a property in may also influence how you receive the rental income. For example, in some countries it's customary to pay rent on a monthly basis, while in others rent could be paid quarterly, or even yearly.
You could set a minimum term on your tenancy to help you manage your money. You could also include a notice period for when the tenants leave, so you have enough time to find new occupants.