How to boost your chances of a successful BTL investment

 

According to Belvoir, when searching for a buy to let property there are several factors, both financial and factual, which need to add up in order to maximise your chances of a successful investment.

To help you in your search Belvoir have put together a useful ticklist so you can recognise a property's potential at speed and with ease…

Price potential

Paul Rice, co-owner of Belvoir Liverpool Central and Belvoir Liverpool West Derby, has this to say: “One of the most important things to think about at the initial stages of your property search is budget.

How much should you spend on purchasing the property? Research the sales market carefully to ensure that the property is being offered at market value with room for capital growth. Check out how much it has been sold for previously too – this information should be readily available online.

If possible try and secure a deal. Vendors are often open to negotiation on sale prices, especially if you are a cash buyer or in a position to promptly proceed.

Buying an overpriced property will affect your profit potential, both in the short-term and when you wish to release your asset on resale.”

Ins and outs

Paul continues: “Additionally, always make sure you've done your research in terms of rental return and how much you could realistically ask per month for the property once tenanted.

Look at the property portals online and ask your local letting agent too. They are industry experts who will be able to provide a desktop valuation or valuation visit.

As well as the probable income, also look at your possible outgoings. Costs, such as annual gas safety certificates, boiler services, property maintenance and repairs, and any management or agency fees, should all be comprehensively calculated so you can work out a property's potential yield after expenses.”

Rental ready

“Is the property you're looking at rental ready?” Paul asks. “Today's tenants want clean neutral spaces with modern bathrooms and kitchens. If a property is already move-in ready then immediate cash flow in terms of rent will potentially be available on completion of the sale.

If work needs to be done, however, then this should be factored into your budget before purchase. Until a tenant moves in there will be no rental return so it's vital to be aware of not only what the work will cost but how long it will take too.”

Perfect postcodes

“Location is one of the essential keys to opening the door to a successful property investment so make sure you're searching in the right postcodes,” he adds. “If budget is limited it's often said that buying the worst property in the best area can be better than buying the best one in the worst.

Areas attractive to tenants usually have a wide selection of local amenities, such as shops and restaurants, plus are near to major transport links. If you're aiming at the family market, good local schools are also a must.”

In demand

“Before starting your search it's also vital to research the local rental market carefully to determine tenant demand,” continues Paul.

What type of properties are tenants looking for in your chosen area? Are they typically young couples who can't get on the property ladder? Maybe they are re-locating families with young children? Perhaps there's a university nearby creating a high demand for rental units for the student market?

Always identify your target market and buy with their wants and needs in mind. Budgets can soon spiral if unnecessary personal touches are added.”

Rental rivals

Assess the competition too,” he adds. “How many similar properties are available to let? What is the turn over and timeline from being marketed to a tenant moving in?

Always ensure there is still sufficient demand and that the local area isn't already over-saturated with the type of property you are considering to purchase.

Look at the rent levels other landlords are asking too, plus the quality of the properties on offer so you can compare and contrast.”

Purchase purpose

Paul concludes: "Even before you've committed to a property it's important to know what your exit strategy is likely to be.

What is the purpose of the purchase? Are you looking to move into the property on retirement? Are you intending to keep hold of it as an investment for your children or grandchildren? Perhaps you're hoping to benefit from capital growth on resale so you can reinvest?

To a certain extent your long-term goals will dictate which property is right for you,” he says. “So it's essential to have your end aims in mind even at the very beginning of your investment journey.”

source http://blog.evolutionproperties.co.uk/2017/04/04/how-to-boost-your-chances-of-a-successful-btl-investment/