It's no secret that to make money with property these days, you need to be armed with as much knowledge as possible!
Here are our top five things to consider when thinking about investing in a buy to let property.
1. Understand the market, at street level!
In light of Brexit and recent legislation changes, it’s now more important than ever to do your research on price values, forecasts and importantly potential rental yields. Overall, although house price values have not significantly increased in London and in fact flattened and declined in many areas more recently, rental prices have held in many places.
Aside from researching the market as a whole, research specific locations, to determine the places where you can achieve the highest yields. Don't just look at areas of London but go to street level to identify the best areas. Take a look at our yield map where you can find the average yields for some of the best investment spots in London which will take you to street level information. Areas that are due for regeneration such as Leyton or Acton can still be a good bet, but dig deeper to streets that have not yet become popular but are on the edge of regeneration.
See properties for Sale in Acton
See properties for Sale in Leyton
2. Mortgage, mortgage, mortgage
While people have said location, location, location, for you your buy-to-let investment is also about getting the best mortgage to make your investment work. With new stricter criteria from lenders, getting great advice from a broker is critical to understanding your options. Interest rates are still low and there are lots of options to pay interest only or a combination of repayment and interest only. With the right LTV (loan to value ratio) there are some great buy to let mortgage deals to be had.
There are many great brokers out there and you can usually contact them for free for some initial advice. The Portico Finance team was set up as an independent advisory team for buy to let landlords and they are happy to chat to you to give you some initial advice. Just email them at firstname.lastname@example.org with your details and they'll give you a call. Most good brokers will have a vast range of products and will be able to match your requirements to specific lenders.
3. Consider capital value potential
It might be a property in an area where prices have risen already but if there is opportunity to add square foot, then it could still be a great opportunity. Check out the current price per square foot for current listings in your area and for those already sold. Are you buying the property at below or above the average price per square foot and if you can add space what value might this add?
Consider locations not just in London where price per square foot is far lower but prices are rising. Speak to our New Business team who can advise on investments in Liverpool and Manchester where there are some great opportunities.
4. Know the legislation and tax implications
New legislation has made becoming a landlord more complicated. Between changes in regulations for HMOs, to Section 21 changes, the landscape has changed dramatically. This shouldn’t deter you though. Before purchasing your first investment property, ask yourself if these are responsibilities you’re willing to shoulder or use an agent that you can trust and who can keep you up to date with changes in legislation. You'll also need to consider taxation on your rental income. Understanding what you might need to pay in tax each year is critical to understand the true profitability of your investment.
5. Consider all your rental options
Consider doing short let or Airbnb before moving to a long term AST agreement.This way you can avoid void periods where you may be without any income from your property. Listing on Airbnb initially to get some good income can be a great option. It also means that if you ever have a void period between tenancies you can re-activate your listing and start earning straight away. Consider using a management company who can ensure you have great guests, that your property is maintained and that you achieve great occupancy levels.
Have you got a property you would like to let or sell? Give our team a call to book an Instant Valuation of try our tool and find out in just 60 seconds!
Call our team on 0207 099 4000 to get in touch with any of our teams to discuss sales, lettings, Airbnb management or to speak to the Portico finance team.