A buy-to-let property is a property that is bought with the intention of renting it out to tenants. The property can be a house, apartment, or even a commercial property. The main advantage of buy-to-let is that it tends to offer a higher return on investment than other forms of investment, such as stocks and shares.
So what makes a property the perfect buy-to-let investment?
There is no definitive answer to this question as what makes a good buy-to-let property depends on the individual investor’s needs and preferences, however, factors such as location, affordability, and potential for capital growth should always be considered.
We’ve detailed below some of the main points to keep in mind:
1. Location, location, location
The property should be located in a desirable area with a strong rental market.
The best location for a buy-to-let property is usually an area that is experiencing high levels of population growth, has a strong jobs market and has a high average rent. The job market aspect is important because, the higher the employment numbers are in that area, the higher the potential rental revenue. Look to see whether the neighbourhood is attracting a large number of significant employers, then buy property before prices rise.
It’s also advisable to look for neighbourhoods that are popular with renters, and that have a good mix of amenities and transport links, with signs of house prices rising steadily.
2. Size
When buying a property to rent out, it’s important to consider the size and layout. You want a property that’s big enough to comfortably house a tenant, but that’s also easy to maintain and manage. Ideally, you should also look for properties with separate living areas and bedrooms, as this will make them more appealing to tenants.
Spaces that can be utilised for working from home have been hugely popular with buyers and renters since the onset of the pandemic. Demonstrating that there is space for this could help to attract more interest.
3. The age of the property
The property should be of a good age, in good condition and have low maintenance costs.
Another thing to think about is the condition of the property – is it in need of any repairs or updates? If so, you may need to factor this into your budget. It’s also important to remember that, as a landlord, you will be responsible for the upkeep of the property, as well as any repairs that may need to be carried out.
4. Price – don’t lose sight of your return on investment!
Price is important because you want to be able to make a good return on your investment.
It’s important to be realistic about your budget when buying a property to rent out.
Remember, you’ll need to factor in the costs of both purchase and renovation, as well as ongoing management and maintenance fees. Make sure you have a clear idea of how much you can afford to spend, and remember to leave some room for potential unexpected expenses.
Our advice to aspiring investors is to think of your buy-to-let investments as long-term investments rather than short-term investments. Capital growth implies that the property you acquired will not only provide you with income in the near term, but it will also provide you with a handsome profit in the long run.
5. How long do other properties of this type take to rent?
You can check how long houses take to rent out in the area you’re interested in with a fast search on Rightmove. Use the filters to your advantage and try to find properties as similar to the one you want to rent out as possible that are also as near to your location as possible – this can help to give you an idea of what sort of properties are in high demand and which of them get snapped up quickly.
Your local agent will most likely have the greatest sense of high-demand neighbourhoods and locations. If there is a great demand for a property, it will be bought up swiftly.
Your next steps
If you’re new to property investment, it’s a good idea to get expert help from a qualified property advisor. They can help you to identify the best opportunities in the market, and can provide guidance on all aspects of the buying process.
An experienced estate agent like Belvoir will be able to provide expert advice on what areas are best to invest in, what type of property will be most profitable, and how to negotiate the best deal.
