A good investment property is likely to deliver greater returns in the future; not just in the form of capital growth but also in the form of rental returns. In order to maximise investment return, here are some key points to consider:
1. Choosing the best time to invest in Buy To Let
There is no “ideal” time to buy; instead investors should make sure it is the “best” time for them personally. This means having your finances in order as well as a long-term investment strategy, so that you’re ready to move on any opportunities that may arise.
The property market moves in cycles. Property values may rise due to strong market growth and remain steady or even decline during certain phases of the cycle. Therefore, as an investor it’s important to know where the market is within the cycle to ensure you buy your property at the right price.
Always bear in mind that owning rental properties means that you have more liabilities, so you need to have enough cash to cover your costs. If you don’t have a large enough cash cushion, then you should probably wait until you do before buying rental property.
2. Setting your goals as a property investor
So what are you looking to achieve? What does success mean to you? Property investors generally invest in property to secure their financial future but in order for you to achieve your goals, you must first articulate what they are. Set a date as to when you want to achieve them and identify key milestones to help you reach your targets. Also, be sensible and start budgeting as it’s the only way to ensure you’re able to balance your income and expenses. This will allow you to see where you’re spending your money and help you to plan for bigger expenses further down the line.
3. Searching for a Buy To Let property
When searching for a sound investment property, you should aim to secure one which will be in continuous demand by tenants, as well as future home buyers. Therefore it’s important to carry out some research to discover the demographics of your area of choice and determine what’s important. For example, if the property is near a university then more bedrooms will be in greater demand rather than a big garden for children to run around. A family home that is close to schools and parks on a quiet street will be more desirable than a property on a busy road.
Location is integral to acquiring a good investment property. If you choose the location correctly, then the chance of gaining higher returns from your investment is far greater than if the location is not desirable. Close proximity to certain amenities increases the desirability and value of a property; these include: schools, public transport, public facilities like post offices, libraries, parks, medical centres, etc. as well as shops and lifestyle activities such as restaurants, bars, beaches, etc.
Read more: The Best UK Places for Buy To Let in 2020
4. Getting the best return on your property investment
Many property investors make the crucial mistake of choosing a property based on emotion, rather than finances and logic. A bad purchase may result in capital growth below the market average or rental income which does not come close to covering the monthly costs to maintain the property. It is therefore vital to carry out research to establish your strategy before making any purchase.
Make sure you check your finances, doing this will give you an idea of how much cash you have available to invest. Don’t immediately assume that you can’t afford to invest. As long as you have a stable and reasonably well paid job with solid employment history, you shouldn’t have a problem getting a loan. You can get pre-approval through your lender directly or through your trusted mortgage broker. Going through a broker before applying for a pre-approval can be beneficial if you’re not sure whether you’re financially ready to invest.
Once you know the mortgage rate and likely rent figures then you must be clinical in deciding whether your investment will work out. Also, don’t forget to factor in maintenance costs and think about what will happen if the property sits empty for a month or two? These are all things to consider. Make sure you know how much the mortgage repayments will be and if it is a tracker one then allow for rates to rise.
5. Stay focused
Above all, make sure you remain focused. Investing in property is a business decision, not an emotional reaction. It’s easy to get overwhelmed when you’re starting something new especially when it’s as big as property investing.
Always remember, it really does pay to look after your tenants. Do this and they will look after you. For many buy-to-let landlords the biggest drag on their investment returns is the void period, a time when you don’t have anyone in the property. Good tenants who want to stay help avoid this and if they move on they may even recommend your property to someone they know. Keep up with maintenance, make sure your property is a nice place to live and also build a good business relationship with your tenants.
Finally, don’t give up. Just imagine if you buy the right properties now, you could be sitting back in years to come, feeling happy and secure knowing your properties may have doubled in value! Now wouldn’t that feel good!
To get started on your property investment journey, take a look at the rental properties for sale by landlords on The Landlord Link – both tenanted and untenanted. And keep checking out our landlord advice blog for more hints and tips for new and experienced landlords.