01: Introduction

Property investment has proved attractive to many people over a sustained period. The theory is simple: buy a property, rent it out and you benefit both from rental income that will go up over time and capital values that should rise as well. But buy to let is not a guaranteed way to make money, and you could even lose money - especially if you take the wrong actions.

Before considering buy to let, it is a good idea to note what could go wrong. The ways that this could happen are:

• Paying too much for a property initially.
• Having to spend too much money on repairs and improvements.
• Having too many void periods (when the property is not let).
• Tenants not paying rent on time or at all.
• Rental income not covering the cost of any borrowing.
• Uninsured losses and damage to the property.
• Selling at a loss or not being able to sell.

With modest luck and good planning, though, buy to let can be a great investment, especially if you take a long-term view and buy and sell at the right time. If you do, it can be possible to:

• Buy a property at less than its ultimate value.
• Make changes that add more value than they cost.
• Secure regular rental income that rises over time.
• Enjoy capital growth that can be realised by eventually selling or by borrowing more, perhaps to buy more properties.

In many property markets – and the UK is no exception – many people choose to (or have to) rent. This can include:

• People saving to buy their own home.
• People who plan to stay in a property for months rather than years.
• Students.
• People whose jobs mean they move around frequently.
• People who do not want the added responsibility and potential costs involved in ownership.
• People who cannot afford to buy. This can include people who want to live in a better property than they could afford to buy.
• People who believe that property prices will fall.

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