Investing in property is a risky business and requires you to have a lot of cash at the outset. However, by putting in a little effort to finding the right property, your investment will pay off. Here are some helpful tips to finding your next buy-to-let property:
Sort out your finances
This point cannot be stressed enough. If you’re thinking about your next buy-to-let investment then you need to know that you can handle the workload and more importantly, can afford it. There are many money making schemes out there and services such as bridging loans but if you really want to be comfortable with your decision then you need to have cold hard cash to throw at your investment. Find an Independent Financial Adviser and discuss your options with them. They will drill right down into your finances and tell you exactly what you can afford.
Finding the best area to invest in
Do you not care where you invest as long as you make money? If so, this is probably the wrong attitude to have. You need to put in a LOT of time to research the particular area that you want to invest in. For example, do you want to invest locally or further afield? We prefer to invest locally as we like to be hands on and would find this tough if we invested further afield, however there’s no doubt that property is cheaper elsewhere and so make sure to consider all of your options before you pull the trigger.
You also need to figure out what kind of tenants you are marketing the property to. Some factors to bear in mind are:
- Affordability – You have your eye on a particular area, but can your targeted tenant demographic afford to rent there? Do they want to live there? (For example wanting a working couple as tenants but buying a property in a uni town will not work for you – your demographic don’t live there).
- Amenities – Do you want to invest close to a town center or further away? What would make your tenants want to stay?
- Public Transport – What are the public transport links like? Would you like the property to be close to a train station? Being close to a train station will increase the property price and so if your demographic won’t use the station, buy a house further back.
- School – Are you looking to buy a property close to good schools? Only if your preferred tenant would use them. Otherwise it’s a wasted expense (you’ll pay a premium for being in a desired catchment area).
Determining the type of property to buy
Depending on your finances, you have a choice as to what kind of property you want to invest in. Do you want to go for a studio flat, 1-2 bed flat, small house, 3 bed house or large house? Old or new? There are lots of different types of property out there and finding the right one will be a long process. The type of property will also depend on your target market. Always keep them at the front of your mind when viewing properties.
You know all the top property sourcing websites such as Rightmove, Zoopla, uPad etc. Spend as much time as you can searching these websites for properties for sale in the area you have chosen to invest in. You can even set up email alerts to let you know when new properties have come on the market. If you know the area well then this is a bonus because you will know where the properties are and what the area is like. You can bookmark the ones you like and discard the ones you don’t. Of course you can always contact the local estate agents to get hot new listings before they go online!
Try not to fall in love with your buy-to-let property
Everybody wants to be in love right? Of course! However, we should stress that investing in BTL is not a relationship, it’s a business. Remember that the property is not somewhere you will be living so try to get in the mindset of your market tenants to get a feel for what they want, not what you want.
Narrow down your list
So you have viewed load of properties and there a few you quite like the look of. This is a good time to make sure you have a list of the properties you think will be a good investment and arrange second viewings. Use the second viewing to ask as many questions and possible and put your business hat on by looking at EVERYTHING. At this point you can take measurements, check for damp, check for cracks, scope out the area and maybe even talk to the neighbours. This is your chance to answer the question: Will this property be a good investment for me?
Making an offer on the property
You should now have a final list of properties that you would like to make an offer on. This is your chance to test the water and get a feel for any competition. Remember that the asking price is usually what the owner wants and has been advised by the agent to sell at. Don’t worry about the asking price, get in there and make a really cheeky offer! If you’re looking at a flat marketed at £120’000, offer £100’000. They can only say no! You never know, you could meet in the middle and pay only £110’000 effectively saving you £10’000 and keeping the seller happy at the same time. There is always room for haggling in the property market, in fact, it’s expected and you will find that properties are listed slightly more expensive than market value as a result of this.
These are just a few basic pointers which will hopefully steer you in the right direction for finding your next buy-to-let investment. If you have any comments, suggestions or pointers of your own, please leave a comment.