Investing on a Buy-to-let Home
A buy-to-let investment is a worthwhile option to consider within the current housing market slump, and there has never been a better time to try your luck. If you receive a bargain offer on a property with the aim of buy-to-let, take the chance, because the worst thing that can happen is that you can sell the home when the asking prices inevitably start to rise again. You will have to understand your options before you make a transaction, because you need to find the ideal house or apartment that could be attractive to a tenant.
Knowing the Market
Researching the market is essential in compiling the information needed in making the right decision, because we are not talking about small stakes here. Go online and find a beginners guide to investing in the property market, before you even start to decide what size or property type you will be searching for.
Location is Everything
Carefully think about the location, especially if you are aiming at students or families, because you will need to have a location in close proximity to universities or schools respectively. Taking into consideration the convenience of the property and providing the most attractive location will be the major factor of obtaining a good tenant over a long-term period. Keep an eye on the market, to understand which properties go quick, and which ones stay on the market for a long time. This will give you an insight to the most attractive and popular areas for potential tenants.
Watching your Figures
Get your figures in order, because a buy-to-let property means you will have to lay down a higher deposit on a mortgage (if you need one), and you need to know exactly what you can afford. Buy within your means and do not risk everything on one endeavor. Take your time when considering offers, and do not rush into any quick decision. If you have to wait for the perfect opportunity, then so be it! Rome wasn’t built in a day, and neither will good rental returns. Don’t be overambitious and choose a property with a realistic price tag, because this is the major reason we are currently seeing so many repossessions.
Good Relationships
Consider how hands on you want to be with your future tenant, because being in the possession of a buy-to-let property is time consuming. Make sure you strike up good relationships with electricians, gardeners and plumbers, as you will probably need to use their services on a regular basis.
View answers to similar questions
Will banks / building societies give a 100% mortgage on a buy-to-let mortgage ?
I am wanting to earn some extra cash by buying property to let. I do have savings, but don't want to use them as a deposit, as I'd rather invest them in my own home. I am currently looking at homes in the £150,000 - £200,000 range that will probably give a return in rent of around 125% - 135% the cost of monthly mortgage repayments. Does anyone know if there are any providers that would loan me all the money required to undertake this venture ?
That all depends on you and your credit history, a bank or building society wont lend to someone with poor credit, its as simple as that. You need to be able to show them that if needs be you could cover that mortgage. You should speak to a mortgage broker who will assess your income and finances and try to find you the right lender for you. Most banks and buidling societies have actually pulled their 100% products after all the problems with the american market so you might be best going for 95%Is it really necessary for the government to build more homes ?
The cost would be phenominal, and the buy to let market will snap them up, so there will still not be enough house's for the first time buyer. Isn't it time to put a stop to the landlords buying up all the cheaper properties,? maybe its time to take the incentive out of the buy to let market, this would free up homes for the young to buy, given them a chance to get their foot on the ladder. Dont get me wrong, i'm not against anyone investing in their future, but the buy to let market has taken so many properties out of the reach of first time buyers.
I agree with you,there should be a limit to how many houses someone can own.Iwatch the auction programs on BBC in the morning and anything within the reach of the first time buyers is snapped up by the developers and buy to let landlords.I also think that there are a lot of abandoned and boarded up properties that the council could compulsory purchase and do up for the homeless and housing lists.There are a lot of youngsters drawing unemployment benefit that could be taught a trade to do these houses up and go on to have a good career,this would help them as well.What to do when seller doesn't want to lower property price?
Hi All. I'm sure this is a common question when it comes to real estate. We've recently found a house we wanted to put an offer in for. We were originally looking for 3 bed semi or end of terrace. This one however is 4 bed and rather close to a descent school (we have 2 kinds, aged 1 and 3).
House asking price was £250k. Some of the 3 beds in the area have an average estimated valuation of £265k - according to for example mouseprice. This house was reduced from approx £265k. The only problem with it is it's a real mess at the moment - it needs everything redone - kitchen, bathroom and separate toilet, floors, even the walls. It's been a buy--to-let, ex-council. Which explains why it's been left in such a mess. I've even found roaches in the kitchen due to tenant neglect. I know how to deal with those, however it's a nuisance and you don't know how spread the infestation is.
Firstly we put an offer in for £225k, which is how much I believe the house is worth - because of size and location. That of course has been rejected. After some consideration we put an offer in for £240k - again just because of the location. OK, it needs A LOT of work but we were prepared to invest next few years to refurbish it.
Even this was rejected. It seems like the seller is dead set on £250k. But since the price was lowered once already I can safely assume it was greedy-priced the first time already. I've told the agent we're not prepared to bid any more and we'll be looking at other house.
People say: you should pay as much as you think it's worth to you personally. I think it's worth around £225k because of all the work it needs done. We can comfortably afford £250k but I don't want to fork out on something not worth it.
Can I expect the seller to come to his senses and eventually agree on the offer? I'm sure loads of people had this kind of experience. Can you offer any advice? Besides "be patient" :)
We've had a sale fall through recently so all this is becoming very frustrating. Is it true that there is a surplus of homes on sale at the moment - EAs are supposed to have increased levels of stock and not many sales overall. One would expect this would slam some sense into sellers ...
Thanks for your answers everyone. I forgot to mention that we've been looking since January (2010) and had one sale fall through (seller got made redundant and couldn't afford to sell).
lightupthesky25: I would imagine UK property market is quite different from US. Though not having experience from US this makes it a bold statement :)
It's true it's a buyer's market at the moment however, any time there is a property worth buying it goes in hours. Also we have a very specific criteria (certain areas, close to good schools, type of build, potential to expand, ...). So the way I see it there is still a lack of "good" property, despite the downturn.
I did my homework on this particular property and it was bought for £168k in 2002 so the owner would still make...Most home owners think their house is worth more than it is. Today it is a buyers market. There are too many houses on the market and too few buyers. Plus every indication is pointing to a downturn in the housing market for at least the next 10 years where they could lose up to 40% of their value. What is worth £164k today will be only worth £120k in 2020.
Buying a house today is a long term investment. You are doing the right thing to be buying in the long term. It will be your family home. I would walk away if they have refused your offer. There are bound to be other bargains in the area. Buy a 3 bed and think about a loft conversion or adding an extension on the back/side to create the size of house you want.
Remember, buy the worst house in the best area, this way you will make a profit if you improve it.