The buy-to-let market is booming. Rising house prices, increasing rental demand… On paper (or in the papers, at least) it looks like a great investment. In practice, it isn't always that easy.

We tend to think of "bricks and mortar" investments as tangible, solid, "can't go wrong". Although this is true in part (a house is more permanent than a share certificate), and there are plenty of successful buy-to-let investors around, some new investors are rushing in without considering the things that could go wrong – and harm their returns.

Here are three of the big ones, and most importantly: how to prevent them.

1. No one wants to live in your property

One of the main risks of buy-to-let investing is that your property could stand empty for a significant period of time. This is known as a "void period", and can quickly eat into your overall return.

How to prevent it

Choose the right property and make it attractive to tenants

Before you buy a property, do some research with your ideal tenant in mind. What kind of properties get snapped up quickly in the area? What type of person do you want to rent to, and what might they be looking for?

For example, if you're looking to rent to students, weigh up whether the property is near enough to the university or has good transport links. If you want to rent to families, look into local schools.

When you've found a property that you're confident will be in demand, it's worth splashing out a bit on the finishing touches that can give it an edge. Could you include extra furniture like a washing machine and fridge? Is it nicely decorated? You should also follow the market when setting your rent, as being too greedy could deter tenants. Making the property as attractive as possible should reduce the risk of long void periods.

That said, it's sound financial practice to make sure you allow for the occasional void period that's beyond your control. If your business plan relies on full occupancy to turn a profit, void periods go from being a minor inconvenience to a major problem.

2. Your tenants trash the place

This is every landlord's worst nightmare: a tenant moves out and leaves the property in an unlettable state – or worse still, causes expensive damage.

Of course, you can keep some of the tenant's deposit to help with the cost of putting it right, but you could still find yourself significantly out of pocket, not to mention dealing with a void period while the work is carried out.

How to prevent it

Choose tenants carefully and stay in touch

While you can't control your tenants' behaviour, you can mitigate the risk by making sure you choose the right tenants. Instead of accepting the first person who says they want the property, take the time to review several applications. Meet prospective tenants personally if you can, and go with your gut; if you get a bad feeling about someone, move on to the next applicant. You should also carry out thorough credit and reference checks (a letting agent can help you with this).

Once the tenant has moved in, establish a good relationship with them by keeping in regular contact; if you have a mutually respectful business relationship, they will be more likely to look after your property. Katrina, who rents out a house in Manchester, said:

"When the tenant has given notice, I always send them an exit document. It just thanks them for being a good tenant and reminds them of a few cleaning jobs they might have forgotten about – like cleaning the oven. I've found that it saves me money as well as reducing the turnaround time between tenancies. Make it clear to the tenant that this also benefits them in terms of getting back their full deposit."

As well as keeping up good relations, there's a serious side to staying in touch. Even if you have landlord insurance, you might find it doesn't pay out for damage caused if you haven't regularly checked on the property throughout the tenancy. Some buy-to-let investors have learned the hard way to always check the small print. Don't assume you're covered for all eventualities; make sure your policy does cover malicious damage by tenants, and read the exceptions.

3. Your letting agent lets you down

You've probably heard horror stories about letting agents who either acted irresponsibly or simply weren't worth the money. Mistakes or negligence on your letting agent's part can end up costing you a small fortune.

How to prevent it

Choose a good letting agent, and be a hands-on landlord

As with tenants, letting agents are ultimately beyond your control, but you can reduce your risk by making a good choice in the first place, and staying involved after the tenant moves in. Think carefully about which services you want a letting agent to provide, and then take the time to find one who fits your requirements and feels trustworthy to you.

There's more to being a landlord than simply sitting back and letting an agent do the work. Even if you're paying for a full management service, it's a good idea to check in with the tenant yourself once in a while. If there's a problem with the property, it's better to find out sooner rather than later, and letting agents can be slow to deal with non-urgent issues.

At the end of the day, no-one is going to look out for your property better than you, and you're the one who will have to fork out for repairs, so keep an eye on what's going on.

Two other ways to maximise your returns

Be prepared for problems

Occasionally in life and business there will be disasters that you just can't do much to prevent. But you can avoid a lot of stress just by anticipating minor problems, and making sure your business plan doesn't hinge on the absence of them.

One way to be prepared is to keep a cash buffer. It's a good money management principle to have a well-topped up emergency fund, and this is particularly true when you're investing in buy-to-let. With an easy access emergency fund in place you can cope with void periods, pay for the occasional repair, and generally nip problems in the bud.

Pay the lowest possible mortgage rate

One of the biggest factors affecting your buy-to-let yield is the interest rate on your mortgage. This has been thrown into sharp focus by the proposed changes to tax relief on mortgage interest.

Fortunately for today's buy-to-let investors this is a time when fixed rate mortgages are at remarkable long-term lows.

If you're on a fixed rate, make sure you know when it expires and shop around for a new deal at least three months in advance. If you're free to switch your mortgage at any time, compare the latest buy-to-let deals to make sure yours is still competitive.

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