Over the past couple of years property investors have received a certain level of scrutiny as new legislation has been passed, a tax crackdown has occurred changing the thresholds of stamp duty and the amount of under 30s renting has become more prevalent producing a new type of tenant. Whether you are a fledgling or experienced investor, the buy to let market has become a gold mine for maximising your profits, in a competitive and lucrative market. Investment opportunities have diversified, leaving strategic investors with the best possible chance of obtaining the best returns yet.
Research the market
At the outset, the first thing you should focus on is researching the market. Instability in the market began to cause controversy after the Brexit decision, however over recent months property remains unhindered and stands as one of the top leading asset classes. It is important to discover the associated risks, property is a long term investment, so it is imperative to consider if you can afford to have money tied up for this long. If you think you may need quick access to your pool of money, then property is not the right choice for you. What is your plan of action if house prices fall further? Will you still be able to afford the property? One of the easiest and most effective forms of research is to speak to other investors, investors with expertise and knowledge who have first-hand experience.
Choose a promising area
First and foremost, where are your potential tenants looking to live? Disregarding your own personal preferences, ‘promising’ means a place people would like to live and this can be for a multitude of reasons. It is important to consider the lives of your tenants, particularly if you are located in a commuter belt, where has good transport links in and out of the city? Where can you find good local schools for young families? What do students desire? Asking yourself questions may sound a little simplistic, but they form the most important aspect of a buy to let investment. RW Invest, property specialists based in Liverpool, offer a diverse array of investment opportunities located throughout numerous UK hotspots with unbeatable rental yields and negotiated low entry prices.
Consider your target tenants
Keep prospective tenants at the forefront of your mind to ensure that it is a property they wish to live in. Who is it you are aiming for? Who is your target? Students and young professionals will be looking for something very different to young families. Reaching a decision on your target market will help to narrow down the type of property you wish to have as this also has an effect on how long the property is tenanted for. Of course, the ideal tenant would be one that wishes to stay for a substantial amount of time and make the property their home, as opposed to a shorter tenancy agreements or unreliable tenants that struggle to keep up with payments.
Check your finances
Finance stands as one of the most dominant factors when considering property investment as you need to make sure you don’t overcommit yourself. Spending beyond your means or investing in a property that is unaffordable will leave you in deep water. Consider the price of local properties and the possible rental incomes to see if the figures add up. A good guide to abide by for buy to let investors is for the rent to cover 125% of the mortgage, this provides a buffer during void periods if the property is left unoccupied leaving no rental income.