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Should you invest in buy-to-let property?

9th December 2014 Simon Holland

With the property market showing signs of improvement over the past 18 months, many people we speak to are considering whether investing in property is a good idea. Of course, our experience over the past 7 years suggests that many of our landlords are indeed enjoying buy-to-let success, and it is certainly true that with every day, there are more and more would-be tenants looking for suitable properties ‘to let’.

However, before taking the plunge, there are a few important factors to consider:

Research is the Key!

Whilst it’s all well and good deciding to invest in property, you must understand the market you are entering into, if you’re to stand any chance of success. Mistakes can be costly, and you wouldn’t suddenly buy £100,000 worth of shares without being aware of the way the stock markets work. Investing in property is just the same!

You must consider the price of property, the amount you’ll need to invest and put down as a deposit, the potential rental yield and any other fees involved, such as legal fees and agency fees. You must also research local comparable properties and understand the likely financial implications of the particular market over the coming years, long before any decision to invest is made.

Financial advisors will have a strong and up to date working knowledge of the housing market. Always choose one who is honest, friendly, and can offer you FREE and independent advice.

Simon and the team at Jacob’s Ladder Property Consultancy Ltd have been working in the property business for over 7 years, and within that time we’ve gained considerable experience working with amateur and experienced investors alike.

Consider your Financial Position 

It is certainly true that the mortgage market has improved enough to allow buy-to-let mortgages back as a workable option for many, there are of course a number of stipulations as to their availability.

Firstly, you’ll need a hefty deposit to take advantage of the best interest rates. For example, a mortgage with a fixed rate of 2.20% will require a 40% deposit to secure (source: Principality 15.01.2015).

If you have enough free cash to avoid requiring a mortgage, caution should still be exercised, especially if the property needs any repair works or money spending on it to make it suitable for future tenants. Being a cash buyer in a purchase often puts you in a stronger position to negotiate, so consider all your options before committing.

The Practical Elements

So, as I’m sure you can imagine, becoming a landlord is about more than simply buying the first property that you see. This may be your investment, but it’s also going to be someone else’s home, so in effect, you’re looking at the whole process through two sets of eyes.

Firstly, you must consider that your investment is safe, in terms of the amount of money you’ll be spending, as well as your likely returns. Secondly, you’ll need to assess its merits as a potential home for somebody else.

With this in mind, consider the properties cosmetic or ‘kerb’ appeal, internally and externally. Review the heating system, and assess the general condition of the property honestly.

A well maintained property, in the right location, will attract the right kind of tenants who will take a long term view and stay in the property for many years to come.

So, if you have any questions, why not give us a ring on 01706 828229?

We would be delighted to discuss whether investing in buy-to-let is for you.