Will you join the landlords who put their heads on the block?

Buy a whole set of apartments and your returns could multiply. So, without care, could your problems

Today's buy-to-let market is tougher than it has been in the past, and for the last year, investors have been faced with falling yields and, in some areas, long periods where their properties lie empty.

This has caused the number of novice landlords looking for a quick buck to drop away, leaving the experienced to concentrate on making more money from what they've already got - as opposed to expanding their portfolios.

And sometimes what they've got can be quite big.

I spotted an opportunity back in 2003 when the property market was booming: I took the plunge, buying an entire block of flats and studios in Nottingham city centre.

This was a high-risk venture for a small-timer like me, but I was tempted by a flyer from a broker about an "unmissable opportunity in the Midlands": a listed grade II mansion was being converted into eight apartments. The lure of a 20 per cent mark-up at the end of the project was enough for me, so I bid for all eight - and I got them.

I'd worked in Nottingham and knew it was one of the fastest-growing cities in Britain - and I'd also bought right opposite Nottingham Trent University.

Over the next 20 months, however, everything that could go wrong did go wrong - rising interest rates, poor workmanship, tricky lenders and building delays. Meanwhile, the boom was blowing itself out and house price growth was slowing.

Further, my letting agent said many young, would-be tenants were opting for university halls instead of private apartments.

When the flats were finished, however, it was a different story. The development was valued at £980,000 - an 18 per cent mark-up on the £800,00 I had originally paid - and I needn't have worried about finding tenants.

Four units were soon filled at the full rental price, and the other four followed at small discounts.

And when the first lettings came to an end this July, the agency managed to relet all eight apartments and studios at a higher price for the upcoming year - nudging up my yield to a respectable 6 per cent.

Despite my own good fortune, buy-to-let blocks require careful planning by investors because the problems that put off one prospective tenant will be multiplied when there are several apartments.

As Melanie Bien, associate director at broker Savills Private Finance, says: "You need to research your purchase - checking it is close to public transport links, local amenities, big companies or universities and colleges."

She adds: "By all means focus on a single area, but don't put too many eggs in one basket - as too many apartments in one development can be exposing yourself to too much risk."

You might put yourself in danger, she explains, of competing against yourself, if all the properties are aimed at the same type of tenant. Or worse, if you don't buy in the "right" area, you might struggle to find tenants at all.

Simon Tyler, from broker Chase de Vere Mortgage Management, warns that applying for a mortgage on a "block" can also be fraught with problems.

"Most lenders will only consider up to 25 per cent of the properties in any one development, meaning you may have to approach four lenders to buy one block."

He adds that they are also reluctant to lend if the block contains commercial properties such as shops and restaurants - as the often unsocial hours, potential noise and even smells may affect the resale value.

"If this is the case, they might scale back the percentage of the property price they are prepared to lend," he says. "So the bigger the deposit you have, the better."

But he adds that buying a whole block as a buy-to-let investment can be a shrewd move, as it often comes at a discount.

While there is money to be made in buy-to-let, landlords also need to keep a close eye on their investments to make sure they're getting the best value on their mortgages. Those with a large portfolio should employ a broker, says Mr Tyler, who can monitor the loans on each property, check them against what else is available on the market and then remortgage to a better deal.

The good news is that with property prices stabilising, lenders are relaxing their criteria. "Some require deposits of just 15 per cent - compared with 25 or 30 per cent in the past year," says Ms Bien.

Mark Hayman, from broker Purely Mortgages, says there are some good fixed- rate deals on offer for buy-to-let investors - starting as low as 4.55 per cent for a three-year fix from the Mortgage Trust.

He recommends that investors employ a professional letting agent - both to vet potential tenants by making the relevant credit checks, and to draw up the tenancy agreements.

"They charge a monthly fee of between 10 and 15 per cent of the monthly rent paid," Mr Hayman explains.

Despite the recent tightening of conditions, the outlook for buy-to-let is encouraging. "As long as lenders are offering low-cost and flexible methods of purchasing properties, there will be a market for it," says Mr Hayman. "There is still money to be made - but over the longer term."

Mr Tyler adds: "If house prices fall more substantially, only landlords who were in it to make a quick buck will be disappointed."

Additional reporting by Esther Shaw