Investing in a buy-to-let property is a great way to secure a healthy financial future. However, in order to maximise the money you make, it’s important to find out which type of property would work best for you.
Here’s how to figure out exactly when and where to invest.
Do your research
Before deciding on when you’re going to invest in a rental property, spend some time keeping your eye on house prices, as well as average rents in the areas that you’re interested in.
This will set you in good stead for understanding local market conditions and being able to time your purchase just right.
There are several ways to stay up to date on house prices and rents, including:
Checking house price indexes, both monthly reports and annual.
Looking up local rental trends using sites like Rightmove and Office for National Statistics (ONS).
Checking the asking prices of similar properties and local listings and the prices they recently sold for.
Speaking with a local estate agent so they can share their expertise in the market and advise you on the current conditions.
Are you new to the lettings market? Find out the top things you should consider before becoming a landlord.
Where to buy?
Location is key, so make sure to consider the following before coming to a decision about the location of your buy-to-let:
- What reputation does the area have and are the local crime rates low?
- What type of tenant are you most likely to attract in this area? (e.g. students, families, or young professionals.)
- How familiar are you with the location? Bear in mind, you do not have to live in the same area as your buy-to-let property, especially if it is managed by a letting agent.
- How affordable is this area and does it fit into your budget?
- Are there any planned projects nearby that may have a future impact on house value and rents?
- Are there good transport links and job opportunities?
- Is the property in any school catchment areas? If so, what are the Ofsted ratings like?
- What kind of amenities are nearby?
Ask your local agent for advice on where to buy
When to buy?
While the property market offers a stable, long-term investment, timing still matters and you should consider the following before committing to a buy-to-let:
- Are you in a good financial position?
- Is the market seeing healthy demand?
- Is your schedule open enough to manage a property by yourself, or do you need a letting agent?
Ask our advice on when is a good time to buy
What to buy?
Once you’ve settled on your budget and desired area, you’ll need to decide which kind of property you’re looking for.
Chances are, if you’ve figured out your budget and the location that you’re interested in, your options will have automatically narrowed down.
If this isn’t the case, and your options remain broad, ask yourself the following to help you decide:
- What type of tenant would be attracted to this type of property? (e.g., families for houses, tenants, and young professionals for flats)
- Is the property freehold or leasehold? If leasehold, how many years are left on the lease and how much will it cost to renew the lease?
- Are there any additional service charges to account for?
- What is the estimated yield on the property as a percentage? (You can calculate this by dividing the annual rental income by the property value and then multiplying it by 100.) Does the estimate line up with your goals and expectations?
- What is the sales history of the property and when was it last on the market?
- What is the property’s Energy Performance Certificate (EPC) rating? Does it need improvements?
What kind of property do you prefer?
Once logistics have been weighed up, personal preference can come into play. Some properties require renovation or refurbishment which can add to the value if you are interested in taking on a project.
On the other hand, refurbishment may not be for you and may not fit into your budget. In which case, you might consider investing in a new build property. These homes can come ready to rent out, including a 10-year warranty and potentially low maintenance.
If you’re on the fence about what to buy, an estate agent will be able to advise you on which options are the most suitable.
What type of tenants do you want?
Lastly, it’s important to be clear on what market you’re aiming for. Some people’s strategy is to rent out in university towns to students, while others invest in convenient areas for young professionals and families.
Whatever your target group of tenants, a Whitegates agent will be able to advise you on the perfect buy-to-let property and location for the best possible return on your investment.
Are you interested in becoming a landlord or investor? Contact Whitegates’ expert team today for more information