With the UK property market showing extremely positive 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 12 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 prospective tenants looking for suitable properties to let.
However, before taking the plunge and buying your first investment property, there are a few important factors to consider:
Pre-Purchase Due Diligence is the Key!
Whilst it’s all well and good deciding to invest in property, you must understand the specifics of 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 purchase price of the property, the amount you’ll need to invest and put down as a deposit, the potential rental yield and any fees involved, such as legal and agency/finder’s or consultancy fees.
You must also research local comparable properties and understand the likely financial implications of the particular local property market over the coming years, long before any decision to invest in a particular property 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 who ideally can offer you FREE and independent advice.
The property team at Jacob’s Ladder, led by Simon Holland have been working in the North West property business for over 12 years, and within that time they’ve gained considerable experience working with amateur and experienced property 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, but there are of course a number of stipulations as to their availability.
If you have enough free cash to avoid requiring a mortgage, caution should still be exercised, especially if the property needs any repairs, renovation 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 be sure to consider all your options before committing.
TOP TIP: Be certain to work with realistic numbers when it comes to the purchase price, estimated costs of renovation or refurbishment and onward property sale or rental values.
The Practical Elements
So, as we’re 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 up to current standards, in respect of gas, fire and electrical safety, and free from any hazards that may pose a risk to future tenants. It also has to be manageable in terms of the amount of money you’ll be spending overall, as well as understanding your likely financial returns.
Secondly, you’ll need to assess the property’s merits as a potential home for somebody else, the location and proximity to local schools, transport links and local amenities.
With this in mind, consider the property’s cosmetic or kerb appeal, internally and externally. Review the age and performance of any heating system, the age, appearance and performance of the roof, the guttering, the drains and make an honest, detailed assessment of the general condition of the property.
A well maintained property, in the right location, will attract the right kind of tenants who will take a longer term view, and hopefully stay in the property and call it their home, for many years to come.
If you have any questions why not give our property team a call on 01706 828229 and they will be delighted to discuss your options and how we may be able to help you!