In recent times, we’ve seen the launch of some brilliant new investment opportunities in the property industry. After bubbling under the surface for many years, investors are now starting to see the value in hotel room investments, student accommodation investments, and, our topic of today, buy to let investments.
More affordable and offering a first step onto the investment ladder, these opportunities are improving in quality every single year and Property Invest UK has access to some of the very best around the country. First, what is buy to let investment and how does it work?
What is Buy to Let Investment?
In truth, we don’t need fancy definitions for this one because the term near enough covers itself; the idea is to buy a property with the sole purpose of renting it out. Depending on your needs and what’s available in the market, there are generally two areas of buy to let investment; existing properties and off-plan residential investments. With the former, the idea may be to renovate a property or buy one that’s ready to go.
When people ask ‘what is buy to let investment?’, many make the assumption that the whole process needs to start from scratch. For example, you find a home, you invest, you renovate, you put the property on the rental market, you interview potential tenants, and then make a decision to get somebody in. Yet, this doesn’t have to be the case. For example, some opportunities will be what’s called ‘turnkey’ solutions.
Turnkey Investments – In these types of investment, tenants will already be living in the property and it will be just waiting for somebody to invest and start taking the income. With your name now on the deed, you receive the rent the tenant pays with minimal effort from yourself.
Is a Buy to Let Investment Right for You?
With so many investment opportunities, you might be wondering where to put your money. If this is the case, we appreciate your due diligence and therefore want to help you find the answer. In our opinion and experience, buy to let investments will be perfect if you;
- Are happy for your money to be locked into property
- Want a tangible asset (as opposed to shares in a company)
- Understand the risks that profit isn’t guaranteed
- Understand that property prices don’t always just go upwards
- Appreciate the time involved in running a property, unless you go for a managed property (more on this later!)
- Want to earn regular rental income
In terms of the latter, because we know this is one reason why you’re here, the rate you charge will depend on a number of factors. For example, you’ll have to consider the property, location, nearby amenities, schools, area, and more. For the most part, estate agents recommend 125% of your mortgage (but this also depends on your other costs).
If you decide to go for a turnkey solution, you won’t have to worry about any of this for a while because your tenant should already be set up with rent and all the associated paperwork.
What if you’re looking for passive income? What if you don’t want to become a landlord and have all the pressure that comes with it? At Property Invest UK, we have some fantastic opportunities for you.
Though still more expensive than student accommodation investments and hotel room investments, you’ll buy the property normally within a development of several properties and the location will be managed on your behalf. As an example, your rental return could be fixed at 6% for two years and it’s all looked after for you (for a small fee). In the meantime, the property could also be building capital growth.
With our own opportunities, we ensure all properties have a central location and therefore will be in demand from those looking to rent. Whether it’s near a large shopping mall, university, entertainment complex, or a combination of all three, the properties will be desirable and you can become an owner without all the responsibilities that normally come with it.
Potential Risks with Buy to Let Investment
We wouldn’t be answering the main question of ‘what is buy to let investment?’ if we didn’t address to potential risks, so what do you have to consider before making a decision?
As with any investment in the property market, you have to consider potential downturns and whether the economy is likely to falter any time soon. If the number of tenants suddenly decreases, your management company may struggle to find people to move in and suddenly the investment is losing money. One way to protect against this is to choose a central location that will always have some level of demand.
With renting especially, one poor decision from the management company and you could have disrespectful tenants that damage the property or fail to pay rent.
If house prices fall, you might be stuck with the property until things turn around. On the other hand, this provides you with more opportunities to continue earning during difficult times.
Managing Risk and Earning Supplementary Income
Although these risks do exist and they are something you need to consider, we believe the best way to deal with them is to manage them effectively. With a brilliant opportunity such as this, it’s better to reduce the risk than miss out. For example, one of the most important steps you face is choosing a reliable and trustworthy company to help you get started.
Thankfully, there are options and we can help at Property Invest UK. With fantastic buy to let investments and experience in the industry, we can answer your questions and ensure you avoid the common pitfalls. Even with topics such as insurance and tax, you’ll have support and you can earn the passive income you desire!