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Buy-to let investments can be an exciting and potentially very rewarding, but should be entered into with the same care and strategic approach as setting up a small business.
Do your market research
As with any business you need to establish your competition before you set up shop. Target a relatively specific area you are interested in and monitor it using 24 hour updates on sites such as Rightmove and Zoopla for both sales and lettings listings. Provided your area is a manageable size you should very quickly start recognising street names and price trends. This will make it much easier to spot a good potential investment when it turns up.
Speak to property professionals
With an estimated 1.5 million landlords in the UK, there’s a chance you know someone who is already a property investor and they may be able to give you some valuable tips and advice. Letting agents can also be an invaluable source of information as they are best placed to know the market and to give advice on what’s letting as well as emerging opportunities.
‘Location, location, location’
The location of the property is critical in determining the success of your buy to let property adventure. Consider the proximity to the local amenities, such as schools, transport links, shopping centres, restaurants and parks. Are these amenities important to the tenants you hope to attract? If you identify young professionals as your target market, they are likely to be interested in being close to the train station or on a bus route and this may influence their decision to rent certain properties. Get it wrong and your property could lie empty for long periods and present a potentially precarious situation financially.
It is a numbers game
Competition for any good investment is likely to be fierce. If no one else is looking and interest seems low then you need to consider why this is. I would always recommend ensuring you have found a mortgage and have a clear investment budget before you start looking. Buy to let property hotspots are a sellers’ market and you are unlikely to be a preferred bidder without all your finances in order.
The great outdoors
Outdoor space will be very attractive to some tenants, particularly families with young children and young professionals who are keen to entertain in the warmer months. It might be a garden, a balcony or some other form of outdoor space, but this can be a real selling point when it comes to finding an ideal rental tenant. Depending on who your target audience is, may depend on whether or not outdoor space is important.
Two-bedroom houses and flats are ever popular and appeal to a wide range of potential tenants, especially those who are finding it tough to get on to the property ladder. Large family homes can command large rents but they appeal to far fewer potential tenants. It may also be worth steering clear of period properties too, avoiding high costs on maintenance when things (inevitably) go wrong. Newer homes will require less maintenance – but watch out for service charges.
Contact Open House Leicester today for consultancy advice on making your money work best for you.