In September 2014, the Council of Mortgage Lenders (CML) reported that buy-to-let lending reached £2.4bn in July 2014, a 26% increase on the previous year. With house prices so high, many are turning to the private rental market to fulfill their accommodation needs. As such, many see buy-to-let as the best route to property investment success. But that doesn't mean it's a guaranteed route to success. Fail to invest wisely and you may find that without tenants, profiting from rent is actually quite difficult.
Here are a few helpful tips for those hoping to reap the benefits of the buy-to-let boom.
Know what yield is
Yield is the percentage of the property’s cost that is covered by the rental income. A good yield should be your priority when investing in buy-to-let and not the capital you can potentially gain by selling the property down the line. Many an investor has made the mistake of thinking too long-term and landed in situations where the rental income they make is not enough to cover their short-term expenses.
Find a good location
Location is everything when it comes to property investment. With buy-to-let, you're going to need to think about what demographics are most likely to rent rather than buy properties, and invest in areas where those demographics are prevalent.
Normally, the two that immediately spring to mind are students and young professionals. While that still is the case, rising property prices means a large number of families are also turning to rent, so as a buy-to-let investor you'll have a broader customer base to choose from. You'll also want to take into account factors such as proximity to public transport, shopping areas and nightlife.
The Telegraph advises following the example of property investment billionaire Steve Bolton, and making use of such resources as the Office for National Statistics to find information on which demographics are predominant in specific areas, and the rental rates for those areas. High rental rates indicate high demand for properties in that district.
Know your target market
This goes hand-in-hand with finding a good location. Once you know the area in which you want to buy property, you need to take into account what kind of property your target market prefers, and act accordingly.
Students, for example, are likely to prefer properties that are easy to maintain and comfortable (but not luxurious). Young professionals, on the other hand, will prefer modern properties in trendy areas.
Build a network of tradesmen
As a landlord you will be responsible for maintaining the property, so you'll want to have a list of trustworthy people you know you can call on when problems arise. This list should include a plumber, electrician, and handyman and so on. It also helps to have an estate agent on hand to handle all dealings between you and your tenants.
Do more research
You wouldn't be here if you didn't already know this was an important step, but it helps to gather as much knowledge as you can. Learn from the experiences of successful property investors, and don't hesitate to contact the experts at Tepilo for professional advice on buying and selling property.
The information and data provided are for general information purposes. They do not constitute investment advice nor can they take account of your own particular circumstances. If you require any advice on investments, you should contact a financial or other professional adviser.