BUY to Let Buy-to-letisbig
business.Investment
in residential property, particularlyinLondon, is as popular as ever andthemajority of thismarket is
investment in London is still high, with 44% of investorsconsidering addingassetsto theirportfoliosoverthe coming 12months. However, investinginresidential property is notnecessarily as straight forwardand easy as
* rESULtS FrOmthE LatESt
Young Index Private Rented Sector (PRS) Sentiment Report show that theappetitefor property
youmay think. There are distinct differences between choosing a homeand selecting an investment
property.Muchtime, thought andeffortmust go intomaking sure that theinvestment property youpurchasewill provide a strong return.
The leaseholder as LANDLORD
in leasehold flats. But is becoming a landlord as simple as it sounds? NEIL YOUNG offers some advice for anyone thinking of going down the buy-to-let route.
To help guideyou throughthe decision
making process, here areYoung London’s top- 10 ‘Do’s and Don’ts’tostart youonthe right track:
Acommonsenseinvestment
DEbbIE CrampINowns two buy-to-let properties,one in Chichester andone just outsideLiverpool.What advice would she give to would-be landlords?
DEbbIE bOUGht her first flat in 2007 with a friendwho ownsanumberofhomesfor rent. At the time, the housing marketwas bouyant and prices rising.Buy-to-let looked likeaquickand easy way tomake somemoney. “My aimwas to let the flat in the short term,wait for theprice to rise andthen sell it quickly,” she explains. However,the global financial crisis hit a year later and changed all that. She now regards the flat as a long- terminvestmentwhichhas remained affordable due to lowermortgage rates and hasnever beenshort of
Liverpoolhas a growing property rentalmarket
tenantsbecause therental market in the NorthWest is growing. “The idea nowis to keep the flat until I retire, bywhich time hopefully the market will have improved and I should be able to sell it at a decent profit,” she says. Despite notmaking the
quick and easymoney she had hoped out of her first property,Debbie hasbeen bitten by the buy-to-let bug. She bought her second property – a showflat on a newbuild development - in 2010,whenmortgage financewas harder to find and the housingmarket was looking distinctly lacklustre.However,Debbie nowappreciates that she is in it forwhatshe describes as “the long haul”and is consideringmoving into the Chichester propertywhen her children leave homeand she and her husband are looking to downsize. With twofurther
properties that she uses as holidaylets,Debbie is slowly buildingher property
52 Chichester:
rentalproperty is in demand
portfolio. She uses an agent to find her tenants for her butmanages the Chichester property herself. The only reason for using a managing agent in Liverpool is distance. “I don’t feel I get real valueformoneyfrom the10%commissionthey charge,” she says. Sowhat areDebbie’s top
tips for anyone thinking of going downthe buy-to-let route? “It’s simple,” she says. “Use your common
sense.Don’t over spend your budget, pick your locationcarefully by workingoutwhat your potential tenantsare likely towant and don’t get emotionally attached to the property –regarditasa business investment nota home”. With house prices stillbeyond thereach of many first time buyers, the rentalmarket is growing. “If the sumsadd up and you are willing to put in the time and energy required, you canmakeitworkfor you,” saysDebbie.●
TheDO’s rESEarCh,rESEarCh,rESEarChKnowledge is power and in this case it is the power to make theright investment decision.You should know the area you are planning to buy into,conductresearchintoregenerationplans andtransport infrastructure improvements as well as knowingthe realistic achievable levels of rent andthe type of tenant theareaand
property will attract. LOCatIONYou should start by applying the ‘10 minute rule’for accesstotransport links, bars, restaurantsand otherlocalamenities.Ifthese aretoo farawaythentheywon’t be aselling pointfor thepropertyand abuildingwhich lacksclose localfeatureswillnot be attractive to renters. Don’tforgettoconsiderwho your idealtenants wouldbeasyou will wanttofind an investment property that caters to their
lifestyle. bUYwELL Youmust consider both the price beingaskedand preciselywhat is included. Once you have found a fewlocations that youlike, it is timeto carryout even more research. Research intowhat rent comparable properties areachieving within theareaisa priority,asthiswillprovide youwithanidea ofwhat returns to expect. Establishwhether whitegoods, flooring, window treatments or furnishing will be includedinthe purchase
price? makESUrEthENUmbErSwOrkWealth is created through a blend of long term capital appreciationand income,sobuy aproperty that supports
this.Include allcostsinyour financial projections(such as legalfees, stampduty, servicecharges andground rent)and remember that someof theseare
youare planning tobuy into
Autumn2012 Flat Living knowthearea Youshould
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