When it comes to profiting from rental property, the most important thing is to buy the RIGHT property at the RIGHT price. However strong the local rental demand and general availability of good quality tenants, it will all be to little use if your investment property is poorly located or unattractive and/or of the wrong type for the local market. So time spent surfing the net, building relationships with good local agents, and actually viewing properties yourself will be time well spent!
Concentrating on yield
For years, property investors have been concentrating on potential capital growth and being prepared to accept fairly unimpressive net yields of 3% or 4%. Obviously, in a property market where there is little inflation, this will no longer do, and investors must look at what sort of yield a property might realize, while still, of course, regarding the property as a long-term capital investment Vlogger Faire.
The problem will be that you will need fairly serious amounts of capital to capitalize on this developing situation. There will still be mortgages available, but only to people regarded as a reasonably good credit risk. The days of the 90% and 100% mortgages are generally over for the foreseeable future, and in the end, that will not be a bad thing.
When the current boom began back in the ‘gold rush days of the late nineties, it was relatively easy to profit from buy to let. Landlords with the right properties could achieve as much as 15% yield along with phenomenal capital growth, and even a ‘so-so’ property could be profitable. That is no longer the case. With the huge increase in property prices and the increasing competition between landlords for tenants, it’s become hard to get more than a 5.5% Net Yield, so more than ever, it’s essential to buy the ‘right’ property.
Buying investment property Do’s and Don’ts.
I suppose these do’s and don’ts are not really hard and fast ‘rules, and there are always exceptions, but you would do well to follow these practical guidelines to profit from your properties.
1. Don’t get too personal
Don’t buy an investment property just because you personally would like to live in it. Always look at it from potential tenants’ points of view.
Also, try to avoid spending too much refurbishing the property. You may fall in love with a fantastic £20,000.00 kitchen and a £10,000.00 bathroom with taps costing over £200.00 each. Still, unless yours is an extremely up-market apartment, you will be wasting your money, as there tends to be a ‘ceiling’ rent for a given size flat or house in any given location.
2. Do research the market. Who will be your tenants?
Where and who are your potential tenants? Are there businesses and organizations with an ever-changing workforce locally, such as hospitals, universities, and even TV studios, where people are usually employed on short-term contracts?
Flats and houses conveniently located for this kind of place should usually be let easily.
3. Do be well connected
The adage, ‘Location, Location, Location’ is paramount for suitable buy-to-let property. It is always helpful for the property to be no more than 15 minutes walk from a station if in a city like London, or at least close to other travel links such as motorways, bus routes, etc. Also, look for handy shopping facilities, bars, and restaurants, as these are always attractive to tenants.
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