Is buy-to-let and all of its subclasses still a good investment? Most certainly, if you do it right. Especially some of Britain’s more regional cities are forecast to remain strong over the next few years.
And although investors can still achieve a good rental yield and capital growth, it isn’t a given.
Savills Letting Director, Monika Scott, recently explained what she thinks is important when it comes to investing in buy-to-let:
As a rule, higher-yielding properties are typically at the lower end of the housing market. As rents increase, the number of potential tenants narrows and yields begin to fall away. In contrast, for capital growth, values at the lower end of the market generally do not rise as rapidly for higher priced properties in desirable areas.
“The biggest challenge is the potential ‘void period’, the time when a property is untenanted during any given year. It is imperative to leave a cushion for at least some empty periods, for changeovers between tenants, and to cover costs if applicant demand temporarily slows down.”
1. Know your stuff
Talk to experts. Exactly knowing how to figure out your yield and what to expect from an investment takes years of experience. If you’re not sure you’ve already gained all the necessary experience, make sure you talk to some experts. They will be able to help you figure out what you’re looking for, how much you have to spend and where you will find the best value for money.
2. Make sure you present it perfectly
People who are willing to spend a fair amount of their monthly income on rent are expecting to see their future home in a perfect condition when they’re looking at it. Everything should be in top condition and look great. This however becomes less important as an investor in case you’re opting for a hands-off completely managed property with assured returns.
3. Great property, even better tenants
The right property in a good location will definitely attract the kind of tenants you actually want living in your property.
4. Protect and maximise your assets
Buying a property is not really the difficult part. It’s what comes after that. When it comes to making money from it, your property needs updating and maintenance without showing a negative effect on your investment.
5. Changes to investment returns and rules overall
As we’ve learned the hard way recently, rules and legislation can change. Sometimes rather drastically. As a property investor you have to be aware of those changes and be willing to deal with them head-on when they happen.