The buy-to-let market has been one of the most successful investment models of recent times, and property has in fact been singled out by the London Stock Exchange as the best investment of the past ten years.
Research
This is without doubt the biggest and most powerful weapon that you have in the fight to make your buy-to-let investments a success. It cannot be stressed how important it is not only to know as much as you can about property in general, but about all of the areas in which properties in your portfolio are located. In addition, the more knowledge you have of financing, legal issues, planning laws, marketing rentals, renovation, interior design and even DIY, the more you will be able to take
control of projects with confidence.
Have a head for figures
As the owner you will need to be on top of the budgets, incomes, outgoings and running costs of each element of your portfolio. There will always be unseen costs to deal with, and you may have to cope with voids in the rental of your properties. Advance planning for as many of these eventualities as possible is essential, and having an idea of how to deal with moderately complex bookkeeping will help you to cope with the numbers. In addition, you will need to have a good accountant on board from the early stages in order to help you deal with the tax on your rental income, as well as any elements of your outgoings on which you might be able to claim tax back.
Let your head rule your heart
The aim in getting the best deals at the front end of your investments is knowing the proper market value of the property, and trying to get as far below that as possible at the end of any improvements. The key to this shopping around for the best prices in your chosen area. Much of this comes down to time, and the more properties you go to view, and the more negotiations you are involved in, the more accustomed you will be to identifying where you can save money. This should help you to reduce the asking price in the most legitimate manner, without just reverting to stubbornness as a negotiating tool.
Even more importantly, try to make sure you look at properties objectively. You are running a business with the aim of making money – remember that you need to make business decisions.
Look for up-and-coming areas
Aside from your factual research on processes and laws, make the effort to follow the property press and the internet to see where the whispers are pointing towards as the next areas for investment potential. Look for things like government investment in infrastructure, special events
and the introduction of multinational companies. All of these things will help to push prices and desirability up and help rental rates.
No-one in the property industry claims to have a perfect crystal ball for predicting future trends, but experts and journalists have the benefit of seeing a huge amount of information and the ability to recognise the signs of growth at the early stages. With enough experience in the market and by reading all of the information available, you will be able to second-guess the habits of the market at large.
Put yourself in their shoes
With every property you add to your portfolio, it is important to make sure you know to whom you will be marketing it as a place to live, and then imagine you are the tenant. Ask the kind of questions that they will. For example, if you are renting out a small apartment, a professional couple
will want to know how long the commute into the business district is, and if there are good restaurants in the vicinity. A property intended for a young family will probably want to have nurseries and good schools in the area.
Walk before you run
For some reason, many novice buy-to-let investors will see the ‘perfect’ property early on in their buying career, but which is far too much of a project either in terms of size, renovation, or financial commitment. Try to plan for a worst-case scenario at the beginning, so that you can make sure you will not be over-extended from the outset. If you are forced to try to catch up as soon as you start to establish your fledgling property portfolio, it will be stressful and will compromise your ability to
make purchases in the future.
Additionally, at the beginning of your property portfolio, it is inevitable that you will make some mistakes. By simple mechanics, it is easier to recover from those mistakes on smaller projects than on large ones.
Off the chain gang
Buy-to-let investors are in a strong position in that they are free to negotiate in the same way as first-time buyers as they have no property to sell in order to facilitate their purchase. This allows you to wait out any haggling over price as the vendor is likely to be far more keen to release their equity than you are to sink yours into their property. Remember this fact in your discussions over price, but try to avoid overusing this tactic. People selling their family home have been known to take lower offers if they have been antagonised by the tactics of their buyer.
Recognise the downsides
In being a hard-headed businessperson in the buy-to-let industry, it pays to have your eyes open fully to the pitfalls and the problems that all of your properties have. Your position of strength comes from knowing exactly what you are dealing with and having the plans in place to remedy or improve the situation. You are not forced to see things with rose-tinted spectacles in a business investment, or to be falsely cheerful in the face of problems in your properties.
Think about management strategies
Finding and dealing with your tenants can be the most stressful part of owning a buy-to-let portfolio, and as the number of properties you own grows, can become a full time occupation. For most people, there will be a tipping point at which it makes perfect business and personal sense to
employ the services of a property management company in order to manage the day-to-day running of the properties.
If you are an existing landlord or potentially a first time landlord get in touch with Belvoir Sheffield today to take advantage of our vast expertise and experience to ensure you are getting the best advice.
Call us before you buy!!! Contact us today on 08452 60 40 90 or email us at sheffield@belvoirlettings.com
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