Buying real estate property for investment in the U.K. isn’t as hard as you might think. Once you understand the basics of real estate investment, the process is straightforward. What is buy to let property? Simply put, it’s a real estate property that a real estate investor purchases with the intent of renting it out to either businesses or private citizens. In this article, we’ll present a few simple tips for those who are considering buy-to-let investment.
Do Your Homework First
Before you buy real estate for investment, you should thoroughly research the current market. If possible, try to find other people, either in your area or on the Internet who have experience in this type of investment. Seek their advice for real estate investing and consider it well. Also, check online and in bookstores for guides on the subject. You should be well aware of the disadvantages as well as of the advantages before you look at any buy to let property that’s offered for sale.
The Importance of Location
Next, choose a location. A successful real estate investor knows the hottest locations as well as those to avoid. You need to consider your market here. For example, if you want to rent to families, be sure to find real estate properties in neighborhoods with schools nearby. Urban families are also likely to need close access to public transportation. If you’re aiming for younger tenants, a neighborhood with trendy shops and proximity to nightclubs and other entertainment venues is ideal.
Don’t Underestimate the Competition
You should also consider whom you’ll be competing with when you buy investment property. Check out real estate prices on web sites like “Primelocation” or “Rightmove” to see what other investors are buying and what they’re charging their tenants. A property listing on these sites will also help you determine how long it will take to rent a property in a specific area.
Crunch the Numbers
Once you’ve determined the area, financial analysis is the next step in property investing. For example, you’ll need to determine whether your rental income will cover the mortgage payments. Also, note that mortgage lenders will likely require a deposit of between 15% and 30% of the property’s market value. Once you’re the owner of the property, it’s important to set aside some funds to cover any emergencies that might occur, such a having to make significant repairs to one of the property’s mechanical systems, like plumbing.
Invest for the Long Term
While working out the finances, be sure to ask yourself some tough questions, like “How long can I afford to pay the mortgage if for some reason the property isn’t rented for several months?” If your answer is less than 2 months, you probably aren’t ready to invest in rental property. A final piece of advice is that you should have reasonable expectations. Very few investors can “make a killing” by flipping houses. Remember that you’re in for the long term and that over time a well-chosen real estate property in the U.K. is highly likely to increase in value.