25th October 2019
Understanding your buy-to-let goals to help find the right investment property
Buy-to-let property can be a brilliant investment — putting your money to use in a way that’s more tangible than stock or shares. There are a number of options available for those looking at buying to let. Here we’ll help you understand your buy-to-let goals to help you find the right investment property that suits your budget, as well as the length and purpose of your investment.
In purchasing a buy-to-let property you are effectively taking on a business, so it is worth considering the costs and requirements of doing so.
Hands-on or hands-off?
When you buy a property to let, you become both homeowner and landlord. Many landlords want to take a hands-on approach and be involved in aspects like maintenance, tenancy agreements and advertising the property. There are also legal obligations and health and safety regulations to abide by as a landlord.
Other buy-to-let owners would rather take their hands off some or all of these responsibilities.
It’s worth thinking in advance about the level of involvement you’d like, and indeed, what you are able to deliver. A letting agent will be able to handle any or all of these aspects for you, or advise you if you’re looking to do them yourself.
Regular income or capital growth?
There are two ways to earn income from a buy-to-let property. It is possible to earn a regular income each month from your rental yield (that is, the amount that remains from rent received, after deducting maintenance and running costs). You will also need to take into account mortgage payments from the rental profit.
If your investment is for the longer term, it is possible to profit from capital growth when you decide to sell the property and make more than you originally paid.
It’s worth bearing in mind that both the rental income and ultimate sale price will be governed in part by the property market and financial trends.
Type of tenant
Another choice to make is the type of tenants you’d like. A student let, for example, generally means higher levels of tenant turnover (as lets are usually based on academic years), and an obligation to meet House of Multiple Occupancy (HMO) standards, but can bring a higher rental yield.
Non-student tenancies, such as families or young professionals, tend to have longer tenancies. The appropriateness of each option will also depend on the area you’re buying-to-let in.
Length of investment
Considering the length of your investment is vital when it comes to calculating mortgage payments, potential profits and your own capacity to be a landlord.
At Matthews of Chester we’ve been helping people buy and let properties for three decades. Our expert team can help you decide on your buy-to-let goals and discover the perfect property for you.
Contact us or call 01244 346226 to speak to our team today.