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@Howard
We have a BTL. At one point we were reluctant landlords - we moved in 2008 and nobody seemed to want my pad in Bow. So I got a BTL mortage and rented it out. Having done it a few years I'm now cool with it and will continue to do it.
Hassle - all investments should have a degree of hassle which is roughly proportional to the potential upside.
As you can imagine, hassle from a home is slightly different to that of Shares - vodafone don't email me about broken toilets. However if you like fixing things and generally making people happy you can manage all this on your own. As long as the property is relatively local...
The upside is the yield - this is the money you have left over each month after the mortgage is paid and the expenses are spent. In general it should be significantly more than the rate you could get on your deposit if say you put it in some other financial product of lower risk. If the yield is significantly less than that then you are - probably - doing it wrong.
A BTL will also require a hefty deposit which has its own opportunity cost that needs to be factored in. Could you be doing something better with it? You define better.
Capital appreciation - the place going up in value - is possible, but not assured, so should be considered as a bonus on top of the yield. How much CA is likely helps you to decide how much of the yield to further invest into the property.
BTL is also one of the few products that allow consumers to 'gear'; bankspeak for profiting from money you have borrowed to buy an asset. i.e. you deposit £70,000, the bank gives you another £100,000 for a price, but you get any profits from the operations and disposal of the thing.
Operations: we don't use an agent, which means over the course of a year we will do basic maintenance and sort out a new contract or find a new tenant if needs be.
I vet the tenants, meet them all, get their references, deal with deposit insurance schemes, sort out contracts. None of this is that much fun, but I like our tenants, and they like me, so generally it's quick and painless if not hugely interesting.
As the place is quite modern generally there are no problems to deal with - everything just ticks along nicely. So most months I do no work associated with it. But things come up - a tenant moves out, the fridge [strike]brakes[/strike] breaks etc - and suddenly you have to do something and relatively quickly. Have a think about whether you like dealing with these kind of issues. Some do, some don't. You can pay someone else to do it, but you will pay over the odds and you'll have to manage them, too. Different problems, rather than no problems.
Like BD I don't define the rent by market rate - I want to keep my tenants, so I under price, which means they nag me for contract extensions, not the other way round. But as long as the yield figure stays on track it's all good.