In This Guide
Administration
Being a landlord
Buy to let investment
Choosing the property
Finding tenants
Letting property
1. Buy to let
2. Residential property investment
3. Why buy to let?
4. Letting your own home
5. Let to buy
6. Short term lets
7. Rent a room
8. Property investment services
Lettings agents
Levels of service
Preparing the property
Problem tenants
Tenancy
Letting property
Residential property investment
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The number one, single most important point to make about investing privately in residential property is that you should always think long term. Unless you are very lucky or extremely shrewd, you are very unlikely to make a quick killing, and you should certainly never enter a property venture looking for a fast buck unless you have a lot of experience in the matter.
Most people get involved in a property venture for one of two
objectives - income or capital growth. You should make sure that
you are clear about your own expectations and requirements before
you jump in. Not only do you need to make sure that you do not
financially overstretch yourself by taking on a property that
is going to cost you more to maintain or buy than you can really
afford, but you must also make sure that the property you choose
is in line with your objectives.
Ask yourself whether growth or income is the main priority for your investment. If you are looking for a substantial growth in the value of your property, it pays to buy in a prime city location or somewhere else that is likely to see substantial long term gains in value.
Alternatively, if a steady income is the reason behind your investment, then clearly the short term rental income is more important than the potential capital gains. Consider popular suburban properties, some ex-council properties, student accommodation and so on.
If you are buying a property to provide you with retirement funds, the objective may be a mixture of capital growth and long term rental income.
Whatever your objectives, the success of residential property
investment depends on two things:
- Consistent high demand from tenants
- Maximisation of possible rental yields
A property will lose you money if it stands empty, as you will not be able to cover the running costs. It is rare for the long term capital gains to be sufficient to outweigh the cost of excessively long void periods where your costs remain high but your revenue is zero. Therefore you must choose your property with care, taking the time to research and understand the local demand characteristics and how the market is likely to change over time. You must ensure that your property is in the right location for your target market and furnished to a standard that is more than adequate for the type of tenant you are looking to serve.
Always look at the investment through the eyes of a local lettings
agent to assess suitability, even if you live locally to the area
in which you are considering buying an investment property. They
will help advise on the property type, location, decoration, furnishing,
fixtures and fittings that will be required by prospective tenants.
Remember that buying an investment property is a business proposition, so you should not let your personal tastes cloud your judgement. This point is reiterated several times in this guide, as it is one of the most commonly made mistakes by landlords.
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