Some quick online research will tell you the best areas of the UK to invest in and where to get the best yields, but do you have intimate knowledge of those towns and cities which enables you to identify the “hot-spots” and “not-spots?”. Many investors are drawn to areas close to where they live for this very reason but if you don’t have that luxury it’s worth engaging with a local agency who can provide that hands-on knowledge and experience.
Run the Numbers
Attractive properties in attractive locations are all well and good but do the numbers add up to a good investment? Ensure you’ve done some research on the area in terms of rental values and tenant types. This way you can calculate your gross yield and any likely void periods to ensure the investment is the right one for you.
As an investor, you have an advantage over many other buyers in that you’re not relying on the sale of your own home to fund your investment. This can be hugely appealing to sellers who don’t want to run the risk of a chain breaking down resulting in a failed sale. Don’t be afraid to make low offers as even if they aren’t accepted they can often provide information as to what level of offer will be accepted.
Your Buy to Let Mortgage
There are numerous lenders in the marketplace who will grant you a mortgage with which to make your investment but take some time to shop around and get the right deal for you. Are you looking for a fixed term mortgage? Interest only? What LTV? Our advice would be to discuss your circumstances with a mortgage broker who can often offer you products that aren’t readily available to the general public.
All property types will require maintenance of sorts at some time or other and so as a landlord it’s important to budget for this. Our general advice is to reserve 5% – 10% of your monthly rent for this purpose.
Hand On v Hands Off
Consider if you want to manage your rental property personally or with the assistance of an agency (usually at a cost of around 10% of monthly rent). The vast majority of investors will opt for the hassle-free approach of the latter but if you only have one or two properties which are close to where you live and you have the time to do so then some individuals may opt for private management.