Top questions to ask yourself when considering buy-to-let investment
The world of buy-to-let can be both confusing and overwhelming.
If you are thinking of purchasing a buy-to-let property, here are a few thoughts and helpful resources to make the process less daunting…..
Motivations
If you are thinking about investing in property it is important to think about why you are doing it, and most importantly, whether you want a regular monthly income, now or in the future.
If now, it is important to know what sort of yield a property might produce. This is calculated by dividing the annual rent you will receive by the value of the property.
For example for a property worth £100,000 that you let for £5,000 per year the gross yield would be 5%. To keep an eye on average yields in your area, sign up to our monthly investor newsletter.
If however, you’re looking for an increase in the value of your investment over the longer term, ensure you keep an eye on how general house prices change over time. In addition to this, ask yourself whether there are any demographic factors or investment plans for the area which may have an impact on values.
Do your research
Tap into a local agent’s expertise on their local market and ask:
- What is happening in your area?
- What types of property are popular with tenants?
- What is rental demand like and how quickly are properties being let?
- What is the average rent?
By gathering answers to all of these questions you will gain a strong indication of the types of returns you can expect.
You should also ask whether there any plans which give the potential for future house price inflation, for example new transport links, infrastructure or large employers moving to an area which may impact on desirability as somewhere to live.
Rightmove have several resources that may help both your research and search for the right property……
- Sign up to our investor newsletter and receive data on your chosen area + updates on potential investment property and auctions in your area.
- Use Draw a Search to define your custom areas of interest on a map.
- Create a Rightmove account and set up instant alerts to receive properties by email that match your criteria as soon as they become available.
- Use our House Prices section to research sold prices and trends in activity for your location.
Types of property
What type of property are you thinking of buying?
Are you planning on buying a property that needs some work? If so will you be doing the work or employing someone to do it?
Renovation or refurbishment projects tend to be popular as there is the potential to add value to the property by doing some work at the outset. Auctions can be a good source for this type of property.
Alternatively, many people who are pressed for time opt for a new build property as they are ready to move into, relatively maintenance free and come with a 10 year warranty.
Who will rent your property?
Are you looking to rent to a group of students, or professionals or perhaps target the holiday let market?
Again talking to agents will help you understand what these tenants expect in terms of property and whether you are better letting furnished or unfurnished.
We hope this quick guide is useful and wish you luck in your search for a property.
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