Are you about to enter the buy-to-let world? It provides an abundance of opportunities to potential investors in terms of earning steady profit by leasing properties to tenants.
In order to expect a high rental yield, investors need to analyse the market, select a promising area, do the math, and opt for the best type of tenant. The UK market is known to offer profitable investment opportunities in cities across the entire country.
We hope you find the tips below useful when investing in 2021.
Research the market
The inceptive aspect to consider prior to making a buy-to-let investment is the real estate market, along with its benefits and risks. Although rental properties are known for providing regular monthly income and capital gains, not every market is suitable for this kind of investment. Read here about the top ten features of a profitable rental property.
The UK real estate market is considered favourable for buy-to-let investments due to being deficient in housing. Most residents rent properties instead of purchasing their own homes because of the abnormally high prices of the latter. Hence, investing in a property for the purpose of renting it to lessees proves profitable for the greatest number of investors in the UK. Anyhow, it’s always a good idea to gain an insight into the profitability of such investments by conducting research or having a consultation with an investor you know.
Make a good choice of an area
Buy-to-let investors are supposed to be extremely attentive in the choice of area, making sure they select a promising location. These locations aren’t necessarily the areas with the most expensive properties in town but those appealing for residents for their convenience. The ultimate choice will depend on the type of lessees you intend to rent the estate to.
For instance, investors planning to rent their houses or flats to families are expected to opt for an area with multiple schools, large parks, and minimal noise pollution. Conversely, lessors whose aim is to lease buy-to-let properties to students should look for flats in campus areas, where colleges are nearby and the selection of pubs and night clubs is extensive. When leasing apartments to business professionals, landlords should pay most attention to transport lines to facilitate the commuting process for tenants.
Do some calculations
Buy-to-let capitalists have to consider finances prior to making an investment in a rental property. There are numerous property investment companies, such as Thirlmere Deacon, whose consultants offer the best buy-to-let investment opportunities to clients. The price of real estate is what has the most influence on the cost of rent, as rent has to be higher than the mortgage repayment rate.
Additionally, lessors are supposed to take into account other minor expenses that follow buy-to-let investments, such as those required for repairs and maintenance. The likelihood of void periods should be also considered, particularly in the case of leasing flats to students.
Landlords need to cope with the summer void period when students return to their homes leaving flats unoccupied till autumn. One has to devise a strategy to cover the mandatory expenses during the summer months in order to compensate for the absence of income.
Select the right type of tenants
Buy-to-let properties can be leased to different types of lessees, which landlords are expected to consider carefully before renting the place. When letting to students, the apartments should be cosy, basic, and convenient to clean. In contrast, young professionals look for modern flats, which are neither too basic nor luxurious.
When renting to families, houses and apartments are best to be empty, as these tenants move in with all of their belongings. Families are perhaps the favourite type of lessees to landlords since they stay the longest and reduce void periods. Conversely, students leave apartments unoccupied during summer, whereas young professionals have a tendency to move to another town once a better job opportunity appears. See this link, https://www.huffingtonpost.com.au/2016/07/15/how-to-make-renters-love-your-property-like-its-their-own_a_21432499/, for some helpful tricks about making renters love your property like it’s their own.
Final thoughts
Buy-to-let properties provide a good chance for investment.
Find a property consultant to assist you in the choice of real estate!