So you’ve taken the plunge and decided to look at buy-to-let properties as a means of investment. If done well this can be a source of quite some profit for you and your family as a whole, but it is important to do your research beforehand. The property market is a fickle place and is in a constant state of rising and falling to meet the needs of investors. If you think this is an easy out as an alternative means of earning money compared to a 9-5 job, then perhaps this is not for you; particularly as a first time buy-to-let investor.
People who are experienced in the property investment market will be able to sit comfortably on their laurels, but it can be a little harder for those just starting out. Like any business venture, you should be ready to make some heavy risks in order to get the bigger pay-outs. Make sure that you are prepared for some setbacks, and that you have some money in the bank for emergency repairs, and you shouldn’t have too many problems when making a buy-to-let investment.
You also have quite a choice to make when looking at a buy-to-let investment venture. There are a number of different types of investment properties and each one yields profit in a different way. We have listed a few of the main ones; as well as what you may need to know about them below.
Popular with middle-class families and those of retirement age, these homes could be a good investment during the holiday season. Doing your research on the best locations for holiday homes and what people expect of them is incredibly beneficial for these types of investment. While they do not provide year round revenue, popularity during the holiday seasons could well make up for it.
Most common with professional singletons and young people looking at employment in the city. Because of the proximity to many places of employment, rental rates for such properties are often quite high. You will want to check the employment history of any prospective tenants if possible, as long term professional employment is far more reliable than those hopping to and from professions.
If you happen to live in or nearby a city which has one or two universities, you may consider a buy-to-let investment on a student house. This can be a block of flats or even a house that has been repurposed to hold several students. Depending on the reputation of the university in question and the condition of the property to begin with, you could have a very positive experience or a negative one. While students provide a reliable source of income, they are less likely to take good care of the property as a whole due to short term tenancies. Regular repairs and disagreements with some tenants may prove to be a failing investment, but it can create a decent amount of revenue in a short time period.
The most popular style of buy-to-let house are two bedroom and three bedroom properties. Often let out to couples or young families, these can provide a stable investment if the couples are in full time or regular employment. As the family is privately renting; either directly from you or through an estate agent, they will have a regular source of reliable income. You can expect long term tenants depending on the age of the family and the size of the property in question. Properties of this nature that do well are those situated in close proximity to schools, railway stations, bus stops or stations and other social points of interest.
It is important that you enter into any agreement knowing fully the terms and conditions of that agreement, so that you are well and fully informed when starting a contract with a person or persons. If you have not done the relevant research, or if you have not provided a ‘safety net’ for your properties by means of insurance or other document, it is you that may end up footing the bill. While a buy-to-let investment can be an immensely profitable investment, it is also important that you are fully prepared for anything.
Article provided by Mike James, an independent content writer in the property industry – working alongside a selection of companies including investment opportunity experts Prime Centrum, who were consulted over the information contained in this piece.