When considering the best properties for buy-to-let investments, there are a few golden rules that every portfolio investor needs to consider before signing on the dotted line, to ensure that they are making the RIGHT decision for them.
A letting agent is the best source of information because ultimately they will have to rent it out for you. If they advise you wrong, they also suffer as they will NOT get the instruction or the fee for letting it, as opposed to an estate agent who has no vested interest in the property post-sale.
If you to work with a consultant such as one of our investment advisors, they should be talking to you about these key points before suggesting ANY properties to buy.
The first thing to consider when making a buy-to-let investment is what YOU want to achieve from it. Are you looking for a regular income (cash flow) or a nest egg they gains value over time (capital appreciation)?
This is really important and any experienced advisor should work through this with you to ensure both you and they understand what your objectives are, as this will dictate a very different purchasing strategy.
At one end of the spectrum, you will get great capital appreciation but low cash flow. At the other end, you will get high cash flow but low appreciation, and then there is everything in between. Understanding where you want to sit on this spectrum will set you off in the right direction.
The level of funding you have available and your attitude to risk will help to ascertain what sort of property purchases are available to you.
If you have more funding available, you may choose to go for larger investments like HMO properties. If funds are limited, a smaller unit such as a 1 bed house or flat may be a better starting point, granting you the ability to work your way up the property ladder over time.
Very few people buy cash, as the return for leveraged purchases are usually much higher. See the ARLA buy to let index review, which is issued quarterly to see the difference demonstrated.
At Concentric, we have dealt with many cases from landlords who went on property courses geared towards massive cash flow, only to end up with a load of run-down, cheap properties full of undesirable tenants, spending most of their time chasing DSS claims and trashed units, all whilst trying to keep the day job.
It's important to know what type of landlord you want to be, so you can make sensible, well-researched choices on the highest quality buy-to-let properties that fit your schedule and budget.
Do you see yourself as a full-time investor landlord with a tool box in the boot and giving up the day job? Or, do you see yourself keeping the day job and just building up an asset base to live off in retirement? Answer these questions with us.
So many portfolio investors make this mistake: they fall upon a type of property that works great as a first time investment, and decide they are only going to buy “that” type of unit or in that "type" of area over and over again.
Putting all their eggs in one basket leaves them exposed. If the market changes - for example, their property type gets oversupplied, or their area becomes the route for the relief road - all of their investments are at risk.
With Concentric, you are expertly advised to selectfully spread your risk across the profile section that you are identified as being within, keeping you safe.
If you have the skills, time and contacts to lend to refrubishment projects, they can prove to be very lurcrative buy-to-let investments, but it can be a very painful and hard experience if you do not.
Landlords who work in a trade such as building, carpentry or plumbing have assets that they would be wise to capitalise on. Landlords who work outside these trades, and lack valuable contacts or any experience with refurbishing, can end up trapped in these projects, often becoming a money drain that eats up their budget. What suits one can be a disaster for another.
We cover refurbishment projects and more in our buy-to-let advisory workshops, taking attendees through the different avenues of property investment and exploring factors they would need to consider. We consult each attendee to assess their skills, desires and personal situations, to help them figure out the best property investment plan for their individual needs.
To find out more about our buy-to-let property investment workshops or how we can help you by working with you as a consultant to help you identify the right property to buy- contact your local branch Coventry, Hinckley, Liverpool, Newcastle, North Tyneside, Wolverhampton of Concentric Sales & Lettings.
Steve started renovating properties in 2003, and from 2007 really started to build up his property portfolio, to what it is today an impressive 150 rental units, mainly HMO properties.
Investing in the Liverpool and Crosby area, where Steve was born and has lived all of his life, starting out as an electrician and then later full time landlord and then running a Concentric Lettings Agency Branch from 2010, there are few people more able to offer this level of advice anywhere in the UK.
Steve helps his clients to look for properties for sale in the market locally to him, suitable for conversion to HMOs, he then will negotiate on their behalf, looking to get the best deal for his client, then liaise with the planning and council officials, builders and other contractors to get the HMO conversion completed and finally rented utilising his team of expert local HMO lettings specialists.
The duo were landlords first and became letting agents in Coventry second. Tony runs the buy to let workshops and property purchase service in Coventry. Tony also specialises in HMO acquisition and is the proud owner of a few HMO units himself, he says "HMO units are a great way to get both Capital Appreciation AND high levels of cash flow too, a real case of the best of both worlds."