If you are considering investing in property then taking a more detailed look at residential buy to let property and the investment opportunities buy to let properties have to offer could certainly be worth your while. In fact more and more investors are coming to the conclusion that buy to let has now become one of the best ways to invest in UK property.
Investing in UK Buy to Let Property
That is not to say investing in residential property is completely risk-free. It is no different from any other form of investment in that there is always a danger that you will lose money rather than make it, but it can be less of a risk and certainly less daunting than the stock market for example, especially if you are well prepared and recognise the risks.
Just think about it for a moment… you will almost certainly have had some experience of buying property and buy to let is simply an extension of that.
You are not jumping in at the deep end with very little “real-life” experience as is the case with many other forms of investment.
If you are to be successful in the buy to let property game you will however need to take great care, gather as much information as you can about potential property purchases, and don’t be afraid to ask for professional advice from property experts in the buy to let and residential property fields.
Research the Property Market Thoroughly
Always remember, research is your key to success.
Obviously as an investor you will need to know everything there is to know about the prospective buy to let property itself… that almost goes without saying.
But you also need to take in to account the location, asking yourself questions such as:
These issues are vital if you are to be a successful but to let landlord and property investor.
Then there are all the legal issues, some of which you may not be aware of… what about planning laws?
Some work may be required on the property at the outset, and then there are the on-going maintenance and renovation costs to consider.
Financial Planning & Investment Appraisals
All these practical but important issues will need to be taken into consideration as you weigh up the financial aspects of your investment.
A detailed investment appraisal or business plan is always a useful tool that will help you to determine your profitability, cash flow requirements, purchase and finance costs, stamp duty, professional fees legal and such like.
It is so important that you carry out this type of detailed pre-acquisition analysis before you even contemplate investing your money in this way.
Focus on your Rental Market to Maximise your Profitability
When buying a buy to let property never make an investment decision based on your personal preferences… you will not be living in the property.
Buying to let means that you are buying to make a profit on your investment, so you need to base your buying choices on a purely business basis.
In other words, which buy to let property is likely to be easiest to rent to tenants, deliver optimum rents and so make you the most profit.
Buy to Let Property & Below Market Values
If you are serious about buying buy to let property then you need to thoroughly understand local property market prices for the type of you are considering buying.
With this knowledge of prices paid for property you then need to reduce the purchase price, trying to get as far below that market value as possible, after any improvements have been carried out.
If you can achieve this Below Market Value (BMV) acquisition it will give you immediate additional equity in the property and aid your prospects for future capital growth in the property.
Remember, always be patient…shop around and seek to get the best price you can for a buy to let property in the area or areas you have identified as being suitable.
It may take some time, but it will be time well spent.
Spotting Good Locations for Property Investment
As far as buy to let location is concerned here is a valuable tip… Always keep a watchful eye on the local property press and the Internet to spot those areas which are being hinted at for future investment potential.
Large scale neighbourhood investment projects can often help to improve local property prices as they typically result in improved access, better amenities, schools etc. all add to the attractiveness of the area.
What will your Tenants look for in a Property for Rent?
It is also important that you put yourself in the shoes of the people to whom you intend to let the property… your prospective tenants.
Always look at buy to let properties from their perspective, not your own.
Ask yourself the questions that they will be asking.
For instance, if the property is particularly suitable for a young family, then they will want to know about local schools and nurseries, the availability of public transport, local parks and play areas, local shopping amenities and so on.
Building your Property Investment Portfolio
If your intention as an investor is to build a more extensive buy to let property investment portfolio owning a number of properties it may still be in your best interests to start small with just one and build from there.
Learn from that experience – and your mistakes – and build on that.
It is often much better from a buy to let property investment perspective to put just one toe in the water rather than jumping in with both feet.
As a buy to let property investor you will also need to have a good head for facts and figures, especially if you are looking to expand on your property portfolio and buy more.
Always bear in mind that almost inevitably there will be unseen costs, so it would be wise to set aside a contingency sum and budget for the unexpected.
Optimising your Buy to Let Tax Liabilities
It is also imperative that you appoint a good accountant from the outset to help you deal with all the sometimes complicated property tax issues.
You may for example, be able to claim tax back on some of your outgoings.
An experienced buy to let accountant can really help you optimise your tax position through good advice and future planning.
Day to Day Property Management
You have also to be realistic as a buy-to-let landlord. You have to recognise that problems will crop-up every now-and-then.
And you have to deal with them efficiently and effectively.
It is no good sweeping them under the carpet.
If you are aware that certain aspects of the property require improvement then you should go ahead and make that improvement, especially if it adds value to your property.
Always remember that maintenance issues ignored can grow into problems that are impossible to solve without pouring a great deal more money into the project.
Simple building defects like leaking gutters, if left un-repaired can have serious and expensive consequences leading to things like internal dampness, damaged finishes and sometimes, if you are really unlucky dry rot.
Buy to Let Property Management
If you are an early stage buy to let investor dealing with only one property and a single tenant you may not find it too demanding on your time.
The difficulty arises when you start to take on more properties and more tenants.
Before you know where you are your property management activities are taking up every minute of your time and, if you are not too careful, it can become very stressful.
It is at this stage that you should seriously consider employing the services of a good local property management company to take care of the day to day running of all your properties.
You may feel that you are spending money on property management fees which you could otherwise have kept for yourself, but the move is often beneficial both from a personal point of view and also business-wise.
If you employ your own full-time property manager directly it will free up your time to identify new buy to let investment opportunities, expand and improve your properties and subsequently generate more revenue… look on it as an investment in itself.
Improved Buying Power
Finally, as a property investor always be aware that when buying buy to let property you are in a very strong position in that you are free to negotiate in the same way as a first-time buyer as there is no property chain involved.
Because you have no property to sell you can afford to take your time haggling over price as the seller is likely to be will be much keener to come reach a sale than you are.
Property Investment Solutions
As a leading independent property and land investment specialists Investment Property Partners offer expert advice and support to clients across our specialist areas of expertise helping them to achieve their investment objectives.
If you are a property investor searching for residential buy to let property, commercial property or overseas property investment opportunities please contact us today to discuss how Investment Property Partners can help you.
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