What to consider if you're a first time investor
With approximately 1.75 million people in the UK now investing in property, there has never been a bigger focus on the world of buy to let. Reports this month have shown the number of landlords has increased by 7% in the space of a year with numbers still continuing to rise. With buy to let now officially in its 20th year (buy to let lending was first introduced in 1996), this method of investing has never been so popular.
So why is it that people are still turning to property investment? Everyone has their own personal reasons for investing, and what may suit one investor may not be ideal for another. Obvious reasons for investing in property are:
- property provides a second income
- buy to let is also a means for retirement for a generation not wanting to rely on annuities
- property can fit around the lifestyle of many modern-day working professionals who are cash rich but time poor
For anyone contemplating a buy to let investment for the first time, it can be difficult to know where to begin. There is a plethora of information to take in and with a large upfront deposit to pay out, it is understandable that some first time investors can be hesitant to take the first step. As property investment specialists, we’ve put together some key factors for anyone considering a buy to let property purchase:
1) Property still provides the best returns
Even with the recent tax changes taking effect from April this year, buy to let property has been proven to continually deliver strong profits for investors; it completely outperforms all other investment types including stocks, bonds and ISAs. No other type of investment has that balance of low risk with the addition of producing large profits. If investors are smart with their property decisions, there is the potential to build portfolios worth several million pounds.
2) Hands-off is a viable option
One main aspect of buy to let which appeals to the large majority of investors is the ease and flexibility it offers. Essentially, it can be as low maintenance as possible, thanks to the use of letting agents who can manage anything from one property to entire portfolios. This allows landlords to have very little involvement in the day-to-day running should they choose to, meaning they can still maintain a full-time job and family/social life whilst still earning a substantial profit from a growing portfolio. Whilst it’s true that letting agents will incur an extra cost that wouldn’t be necessary if one was managing properties by themselves, it’s important to remember that agents not only take away the demanding management side of property lettings, but they’re in a better position to negotiate rent increases than a landlord with little experience, resulting in the costs giving you the potential to earn even more.
3) Be open-minded with locations
As an agent, we often come across first time investors who are keen on investing in similar properties to their own home within close proximity to where they live. While this is understandable, we’re always keen to encourage new investors to look further afield at the rental yields that can be achieved in other parts of the UK. Cities such as Manchester, Liverpool, Birmingham and Leeds are extremely profitable when it comes to property as apartments are affordable, yet do have the potential for capital growth and generally provide higher rental yields, averaging around 6-7%, when compared to those further south of the country, which generally sees around 3-4%.
It's never too late to invest in your first buy to let property. To find out more about how we can help you start your journey, contact us today. Our team can help and advise you on where to find the highest rental yields across the UK and which properties can give you the best returns on your investment. Give us a call on 0800 011 2277.