Investors are faced with several challenges during the process of deciding to buy a property. We’ve put together a short list of considerations for investors both new and old to think about when considering their next investment.
Set a Budget
Working within your means is vital when considering a buy-to-let investment opportunity. Often spending more doesn’t always mean bigger return on investment, so ensuring you’ve got a budget you’re comfortable with is paramount. Yields are important, sometimes if you opt for the £150,000 apartment over the £200,000 apartment you can get a better yield and a quicker return on investment, so this is important to consider in the long run.
Property is and always will be a long-term financial gain. It’s rare for property to decrease in value, but it does take time to see any exponential increases. Ensuring your financial security in the short and medium term is essential for those long term payoffs that property can provide.
Choose a good location
Often investors like to choose an area they know, but mostly they look at areas that have the biggest capital growth such as the North West. We often get asked by others “Why the North West?” and the answer is simple. Investment. Local authorities and councils in areas such as Manchester, Preston, Liverpool, and Bolton have worked hard to put together masterplans. Each area has it’s own reason for being so investable, Manchester with it’s booming creative/tech and fashion industries, Preston with its expansion, commuting ability and location near to outdoor pursuits/the Lake District and Liverpool that’s been through the “capital of culture” growth.
Rental demand has hit an all time high in these areas, making buy-to-let properties in the North West highly desirable for investors. Developers are trying to keep up with demand, The Heaton Group are developing properties across multiple locations of varying sizes and have had fantastic interest from investors already.
Decide on a new build or something existing
It’s important to remember that this will not be your own home. When looking at properties you consider for a buy to let, often the older properties have more character or charm but ultimately don’t provide the significant return on investment purchasing off-plan does. You’ll find the value of an off-plan investment increases dramatically after the development is completed. Off-plan is often seen as “high-risk” but unless the developer hasn’t financed the development, it’s quite a safe bet.
New builds also require less maintenance and are easier to let out to cautious, modern minded tenants who are looking for something with a higher specification offering such as modern bathrooms and storage. Older properties require more upkeep and sometimes aren’t as easy to let out either. That isn’t to say more establish properties don’t have their advantages, they’re readily available, often have a history behind them and there’s the ability to look how it’s performed within a portfolio previously too.
Self-managed or through an agent?
Most buy-to-let investors are looking for more of a hands off property investment and as such will put it in the hands of an agent who long term, have a better ability to handle the day-to-day demands of tenants. In most cases they have preexisting maintenance networks and offices for tenants to call/enquire with emergency numbers. There are however a few investors who much prefer the hands-on approach and manage their own properties. While this approach can be cost effective provided it’s done right – this isn’t a common approach for investors unless they have an interest in being the sole point of contact and responsible for 24/7 emergency cover.
The Heaton Group have an in-house lettings team that cover most investors property portfolios across the North West. With almost 20 staff and a maintenance team on hand, we usually deal with investors properties after they’ve completed and got tenants, managing the process from completion through to viewings, contracts, collecting rent and ongoing maintenance of the property, offering the true “hands-off” investment where required.
Research any additional costs
Solicitors are vital within any transacting process as they’ll handle the contracts, they’ll deal with most of the process through to completion so understanding that there may be costs associated with this is important. Stamp duty is also worth considering here, currently the UK has a reduction in stamp duty not only for first time buyers, but also for people looking to buy a second property or buy-to-let. It is an additional cost to owning the property though, but with the new rates in place, there are savings to be made up to properties costing £1 million.
Ground Rent is also an ongoing cost to consider, mostly it’s set for a term by the leaseholder and paid annually but is set for a very long period in most cases. It means that although you don’t own the entire land when you purchase your development (if it’s an apartment) you are effectively renting it and as such it’s a small additional cost to consider going forward.
If you’d like to speak to a member of our sales team about any potential investments, then please do contact us on 01942 251 945 or email us on firstname.lastname@example.org