First time investors: buying a home vs buying for investment
Following on from our last piece, ‘what to consider if you’re a first time investor’, our latest blog post will highlight the difference between buying a home for you to live in and buying your first ever buy to let investment.
Many first time investors are likely to have bought their own home previous to buy to let, but purchasing a property for investment purposes requires a completely different type of research exercise. It’s important to eradicate the emotion of buying a property for personal use and stick to the hard facts for investment purposes.
Here’s some points you might find useful when looking for your first buy to let purchase.
1) It’s strictly business
One thing to bear in mind if you have bought a home for yourself previously – it’s likely your decision will have been made from a very personal perspective. The difference with buy to let is that it is not a home for yourself. Don’t be drawn in by certain décor and your own particular tastes as this might mean nothing to a potential tenant. Be practical and remember what is likely to reap you the most rewards rather than win your heart.
2) Think about the tenant
It’s important to grasp from day one who it is you’re trying to attract to this property. A young family? City workers? Graduates? Tenant demand is highly reliant on location and surrounding amenities. You may prefer to live in a property in the quiet countryside as oppose to a busy high street with lots of bars and restaurants, but it’s likely that the latter will attract working professionals, who are a key target audience for investors. Where you choose to invest could also have an effect on how much money your property will make. The same applies when deciding whether to furnish your property or not. Remember – well located apartments, with good transport links, supplied fully furnished and with a waterside view will mean much more to a professional tenant than a garden and a three storey house in the suburbs.
3) Focus on numbers
While budgets and numbers do need to be considered when buying your own home, it’s a slightly different matter when you’re looking to invest. Sometimes when you’re buying a home for your own residential use, you go slightly over budget or pay above the asking price to secure the home you really want. With buy to let, you don’t want to be paying over the odds as this will impact on your returns each month and also on the amount of profit when you decide to sell. Shop around and see where it is you can get the most for your money. Focusing on property that offers strong yield returns, high tenant demand and the potential for strong future capital growth. Purchasing below market value can also be a huge advantage and will result in instant equity from day one.
If you’re considering purchasing a buy to let investment for the first time, contact our team today. We can help talk you through the buying process and advise you on how best to reach your personal financial goals. Call us on 0800 011 2277 and join us next week for the third instalment in our series of posts for first time investors.