Top tips to a successful buy-to-let
There are a number of factors buy-to-let investors need to consider when searching for a property to purchase. Belvoir have produced a list of useful factors to help investors recognise a property’s potential.
“One of the most important things to think about at the initial stages of your property search is budget” according to Paul Rice, co-owner of Belvoir Liverpool Central and Belvoir Liverpool West Derby.
He advises all investors to research the sales market before purchasing a property to ensure you pay the market value with room for capital growth.
Venders are often open to offers on sales prices, therefore purchasers should where possible try to negotiate a better deal, particularly if they are cash buyers or are able to proceed quickly. Overpriced properties will affect buyers profit potential in the short and long term.
It is important to research the potential rental return achievable from a property to determine how much you could realistically achieve per month. This information can be found on property portals or by asking your local letting agent for advice.
Possible outgoings should also be considered when calculating return on rental properties. Costs such as yearly gas safety certificates, property maintenance and agency fees should all be budgeted for before calculating a property’s rental yield.
If work needs to be done at a property before renting it out, the cost of this should be budgeted for before purchasing the property. While works are ongoing, investors receive no rental income. The cost and time for the works to be complete must therefore be considered.
If a property is ready for tenants to move into then there is the potential to receive a return almost immediately upon completion of the sale.
Paul claims: “Location is one of the essential keys to opening the door to a successful property investment so make sure you’re searching in the right postcodes,” he adds. “If budget is limited it’s often said that buying the worst property in the best area can be better than buying the best one in the worst”.
Tenant demand is key to any successful investment. Investors should research the local market to ensure there is a need for rental accommodation and identify the type of property tenants are looking for in the chosen area.
Paul highlights the importance of knowing your target market suggesting investors should buy with the tenants wants and needs in mind. He adds: “Budgets can soon spiral if unnecessary personal touches are added”.
Before purchasing investors should ask questions such as; how many comparable properties are available, what rents were achieved and how long did they take to let?
Try to ensure the market isn’t flooded with the type of property you are considering buying, to ensure there is sufficient demand if you were to proceed with the purchase.
The purpose of a buy-to-let purchase is also a key factor for investors to consider.
According Paul, “the extent of your long-term goals will dictate which property is right for you so it is essential to have your end aims in mind even at the beginning of your investment journey”.
Full article available on Property Reporter: http://www.propertyreporter.co.uk/landlords/how-to-boost-your-chances-of-a-successful-btl-investment.html