Buy to let is a fascinating area of investment becoming increasingly more popular through enticing investors with its extensive list of positives. Low interest rates, rising rents and recovering house prices have ensured the last few years have remained extremely prosperous for a diverse number of landlords, with 1.4 million people owning a property which they let for an additional income.
However, the resilience throughout the property market has not always been so prevalent, therefore it is important to follow certain factors to guide your choices when embarking on a buy to let property venture.
Make Rental Income a Large Part of Your Total Return
Capital growth is an achievable return in the long run, providing you choose the right location. In the shorter term, most landlords focus on cashflow to ensure mortgage payments and other costs are covered. Property only serves as a worthy investment and a true asset if it is servicing its own debt and bringing in a high enough level of profit to make a stable income. Profit acquired should be strong enough to abstain against market fluctuations and interest rate increases.
If, for example, the property does not cover additional extras and the interest rate rises, an investor could be left in deep water as they are struggling to withhold a property that is becoming more unaffordable and often the only option would be to sell, which may come at a bad time and lead to a total loss.
Understanding Your Customer
Brexit has caused a growth of inadvertent landlords, as people have opted to let a property perhaps because they couldn’t sell it in the face of a weaker market, meaning the property was probably one they had lived in themselves rather than one specifically chosen for the sole purpose of letting.
Instead of envisaging whether you would like to live in your investment property, it is beneficial to put yourself in the place of your target tenant. Who are they? What is their sole purpose of living there? Are they students? Do they require residential housing?
Allowing potential tenants to create their own stamp, such as furnishings makes it feel more personalised and homely, encouraging these tenants to stay for longer, which proves a plus for a landlord.
It is important to invest in a location with strong tenant demand, and higher than average rents indicate stronger demand in an area.
Consider How Hands-on a Landlord You Want to Be
Buying a property is the first hurdle, the next is deciding upon how much control you would like to have. Will you rent it out and trust someone external to manage your own property?
Although agents will charge a management fee, they can be present if anything goes wrong and help to provide an ideal alternative for those who require management of their UK properties whilst living overseas.
RW Invest, property investment specialists, offer a diverse range of buy to let opportunities across the whole of the UK that promise to deliver on rental returns and offer assurance for potential capital appreciation.
