Making The Most Out Of An Investment Property Purchase
Starting Your Property Investment Portfolio
There really has never been a better time to invest in property. The buy to let market has seen consistent success for a number of years and this is set to continue for some time thanks to low interest rates and little returns being gained elsewhere.
Those contemplating an investment property purchase for the first time may not be aware of the many options available or understand how to really get the best returns from property. Without good management and a solid understanding of the industry, many investors run the risk of making poor choices which affect their returns by not making the most of their assets.
Determine the Crucial Elements
Aside from assessing what you want from your investment, (for example, maximum income, capital growth) finding property in locations that are likely to help meet your objectives is the next crucial element. Where your properties are located is a key factor in any kind of property purchase, so all options should be carefully considered.
Recent figures from HSBC show both Manchester and Liverpool are in the top 10 buy to let hotspots in the UK as both areas show strong yields of around 7-8% and both areas have great potential for capital growth. It is this kind of information that investors need to address when making a purchase as not only do you stand to make a sizeable profit, but there is also the added benefit of having a property that will continue to increase in value.
Once an investor has established an area in which to purchase a property, it’s important they consider the kind of tenant they would want to attract. Some landlords unfortunately can end up with troublesome tenants whereas others have no issues at all. Whilst you can put a vetting process in place yourself, this is where an experienced letting agent can really help to minimise problem tenants.
Managing Your Property
Property management can be a full time job and is something that should be considered seriously before making a buy to let purchase. Some landlords do choose to manage property themselves, however, this tends to be better suited to those who have a lot of spare time and live within close proximity to their investments. A hands-on landlord has a responsibility to deal with tenant issues such as broken appliances, refurbishing and property viewings. This approach can be a strain on those with several properties as general upkeep would require working unsociable hours and being constantly on call for any tenant emergencies.
Many successful investors take a hands-off approach, meaning, for a small fee, they can leave the day to day dealings and management of the property to a lettings agency. It’s ideal for landlords who are looking for a second income or a means to retirement but don’t necessarily have the time to spend maintaining a multitude of properties. Those considering a hands-off investment should look at established lettings agents who can be trusted. Respectable agents are usually licenced members of organisations such as the Property Ombudsman and the National Approved Letting Scheme, so be sure to look out for these in the early stages of due diligence.
Suiting Your Lifestyle
There are a number of reasons that people may choose to get into buy to let, one of the main ones being the amount of financial freedom it can allow in the long term. Many investors choose to become landlords in order to have assets to pass on to relatives and loved ones. Others choose to use it to generate extra income or as a means to fund retirement instead of a traditional pension. With the changes to pensions taking place in April this year, many aged 55 and over are looking into a buy to let investment. Research shows that property outperforms all other asset classes including stocks and shares, so higher returns are usually expected.
Another added benefit of property investment is that it isn’t necessarily restricted to the UK. Those looking to move abroad in their retirement years, or want a holiday home in the sun, can look to gain an income while renting out the property but still get the added luxury of using the property as and when they choose.
Depending on lifestyle, it’s down to the landlord to ultimately decide what kind of approach they wish to take in order to gain maximum income, but possibly still have the freedom for other commitments. For the landlord with years of experience and not necessarily looking to make maximum returns, a hands-on or renovation property could be better suited. For the investor who is looking for an extra income but is time poor, then a hands-off approach would certainly be a wise solution.
If you’re still unsure or have any questions, seek advice from a property investment company like Sequre Property Investment. Our team will be able to help point you in the right direction based on your individual circumstances and help with your search for a property which meets your objectives.