The Buy-to-Let market
Have faith in bricks and mortar. Although many buyers face difficulty in obtaining a mortgage, particularly first-time buyers, a window of opportunity has opened for landlords. The buy-to-let market is growing in appeal and advantage; with lower house prices and rising rents, landlords are looking to increase their portfolios in order to meet increased demand.
According to the RICS Residential Lettings Survey 2012, rents rose further in the three months to April as fresh tenant demand and growing supply kept the market buoyant. 13% of Welsh surveyors also predict that rents will continue to rise instead of fall over the coming months.
However, it’s turning plans into reality that matters most. The ultimate aim is to make a return on your investment. Property offers this in two ways; firstly through capital growth and secondly via rental income. As an asset class, property is unique due to its ability to be managed to increase this return. Management is therefore crucial.
As a landlord you can be involved as much or as little as you wish, but with busy schedules who wants the extra hassle or worry? CPS Homes will look after you. We offer a quality, professional and personal service, caring passionately about what we do. We will do everything from marketing and finding suitable tenants for your property, to dealing with potentially tricky subjects such as HMO licensing and deposit protection legislation, all whilst maintaining and inspecting throughout tenancies.
Deciding which property to invest in can seem daunting - but we can help. Below are five points to consider in order to successfully generate a profit:
1) How much demand is there for the area and what would draw people to it? For professionals, is it within a commuter belt and thereby offering good transport links around and outside of the city? Students don’t tend to have cars, so will require somewhere within close proximity to their place of study. For those with young families, the area should ideally offer a range of schools.
2) Put yourself in the shoes of your target tenant. Who are they and what do they want? If students, it needs to be clean and comfortable but not necessarily luxurious – though the standard of student accommodation has improved a lot in recent years. Young professionals tend to prefer modern and stylish but not overbearing, whilst families are likely to have plenty of their own belongings and will often need a blank canvas, so consider being flexible on the furnishings.
3) Having considered the location of the property and the type of tenant it will attract, what is it going to cost you? Can it be rented out in its current state or will you have to carry out work in order to make it presentable? If you were to carry out improvement work, consider how much rental value this will add to the property – it’s likely you will need to enlist the help of a local letting agent in order to do this. You need to work out the yield potential in order to make the investment worthwhile.
4) There are specialist buy-to-let mortgage brokers around – don’t be afraid to speak to more than one of them. You need to be in an informed position in order to make such a big decision, so feel free to ask as many questions as you like. You’re under no obligation to use them, even after you’ve spoken.
5) You will be able to carry out a lot of your own due diligence throughout the purchasing process, but there’s no substitute for local, expert knowledge when it comes to the sourcing of tenants and management of the property. Speak to the letting agents that are on the ‘frontline’ and deal with the type of tenant you’re aiming for day in, day out. They’ll advise you what they’d expect the property to fetch once placed on the market, as well as other things you may not have considered - the legal requirements for gas and electrical safety certificates being a main one.
We have a number of attractive properties for sale to start the ball rolling. Now is the time to start looking; the sooner the property is ready, the sooner you will start reaping the rewards.
