Posted: 19 July 2013 by Higgins Homes
Whilst it may not have the same explosive allure as during the original boom, buy to let remains a great investment for those who are in a position to put together a deposit and obtain a mortgage. The latest figures from the Council of Mortgage Lenders indicate that the buy to let market makes up around 13% of the total 11.26 million mortgages in the UK and it is a sector that is still growing, with around a Â£0.5 billion rise on value figures for this time last year.
If you're looking to enter into the buy to let market then over the next two blogs we're going to cover our top ten tips for buying a property to let.
1. Do your homework. Any property investment is fairly significant so the number one tip when it comes to ensuring a successful buy to let is equipping yourself with information. This is particularly the case if you aren't an experienced buy to let investor. Areas to focus on include planning laws, average market prices in the area you're looking at, property financing and the timetables and potential pitfalls of renovation.
2. Make your decisions logically. For some reason, when buying property, many of us seem to look for that 'feeling' that a property is 'the right one.' With a buy to let investment this isn't the right route to take, especially as someone else will be living there. You're trying to get the best deal in your target area, which will bring in the optimum rent, with the minimum outgoing on interior design and upkeep. Let these be the factors that help you make your decision, not whether something feels 'right.'
3. Try to choose areas that are on the verge of popularity. Ok, this can seem difficult to do on the face of it, but by forging links with the local real estate community, looking out for signs of development and paying attention to the kinds of facilities and amenities in an area and the type of renters they are attracting a picture of which areas are 'up and coming' will start to take shape. Buy to let is all about profit and buying a property at a great deal in an area where rents then shoot up is the perfect scenario.
4. Do your sums. It's an exciting step moving into buy to let and it's easy to get carried away, particularly if you have grand plans for renovations to increase the rental value. Before you even begin looking at properties it's hugely important to get to grips with the figures. Ensure that you will have money put aside for when the property is empty to cover the mortgage, as well as funds for on-going repairs and improvements. Remember your rental should cover around 125% of your mortgage payments and if you don't want to pay a high interest rate you'll need a deposit of between 15% and 30%.
5. Take your time. This applies to everything, from finding the right finance fit, to choosing your type of tenant (see Part 2) and picking the property itself. There's no harm in listening to your instincts as long as they match up with logic.
Higgins Homes is a property development company offering a range of attractive buy to let investment opportunities in London, Essex and beyond. For more information, and for help finding the perfect buy to let property, see our developments.