Specifically, we are looking at “Why invest in buy to let?” We are also providing our top tips on this investment channel to ensure that you hit and exceed your investment goals.
Buy to Let in Context
First thing’s first, buy to let is no doubt stricter than it once was. Changes to tax legislation have made this investment avenue a little more challenging but it still remains a strong market. Why? Because interest rates are low, mortgages are cheap and returns are strong.
While some people might say that the impact of the 3 per cent stamp duty surcharge makes this a less profitable enterprise, it’s all about knowing where to look and considering locations that may not seem immediately obvious.
For example, we have plenty of properties with fantastic buy to let potential in Birmingham where property prices and demand only looks set to increase with the massive regeneration and development being invested into the city over the next few years.
Bricks and Mortar
Buy to let is instantly attractive as a solid bricks and mortar investment. As with any investment, there is no cast iron guarantee of success but this type of investment – when chosen wisely – has an excellent track record. A fifth of all UK households pay rent with increasing longevity and population growth both reasons why buy to let continues to remain strong.
Once you have raised the deposit, it’s all about finding the most resilient regional financial markets in which to invest in property for strong returns. Mortgage rates remain increasingly and fiercely competitive, which is good news for investors but you must ensure to invest with both a short-term and long-term vision which brings us nicely into the next point – the flexibility of buy to let.
Whether you are looking for yield, growth or a healthy balance of the two, different buy to let properties will help you fulfil your ambitions. Demand remains high for rental properties, especially in areas with a large student population. With rents predicted to rise with inflation, the market only continues to look more attractive.
New Build Benefits
We would recommend investing into new properties rather than those that require renovation. With any new build, you know exactly what you are dealing with, unlike older properties where maintenance and repair costs can quickly spiral, making a major dent in your investment returns.
New builds also represent those properties catering to the most current rental market, with locations close to local amenities and transport links. Many include a fully serviced home environment with an on-site gym, parking and other desirable features.
One of our top tips – and something that our expert team can help you with – is to work out your target tenant before making any purchase.
This means developing a profile of their key requirements and making sure to buy in an area that will appeal to them. Some people prefer to rent to families, other to a professional couple and others to students. You should also consider other issues such as whether you will rent the property furnished or unfurnished and if your property has en-suite options, a parking space and a garden, all of which may be deal breakers for certain tenants.
It’s a personal choice and one you need to make early on in the process as knowing your target market will affect everything about where you choose to buy. It also means calculating a comprehensive budget to include any legal costs, rental insurance and other costs associated with buy to let investments.
A Profitable Investment Channel
Buy to let remains a highly profitable investment channel with solid, reliable and regular returns and a great level of flexibility for landlords at all levels. As a highly adaptable sector, it’s all about doing your research and investing in a property in a location that will remain strong during periods of market downturn thanks to a strong supply-demand balance with a steady stream of desirable tenants from your target market.
For more information on any aspect of buy to let property investment, contact our expert professional team at Alesco today.