While property investment is a risky endeavour, long-term buy to let properties represent a probably safe and strong investment chance, if chosen considerately. We have collected some of the factors to consider before selecting a buy to let investment.
1. Research the market
Whether you’re investing in a buy to let property, your first step should be to research the market well. Research the area, and learn the basics of buy to let investments, consider if buy to let investments are suitable for you, and if they’re the best way to invest your cash.
2. Choose a good location
As with any other kind of property investment, your success can greatly depend on your chosen location. You’ll first need to research the economic, demographic and social situation of the area. Also consider the future of the location. Rising economy, new developments, business investments planned for the future are all positive signs, as they’ll mean future property appreciation, and a stable property investment. Economic growth also means that growing employment levels, and so a goodrental market. You must also consider the stability of the real estate market and the growth potential of rental yields.
3. Think about the needs of your potential tenant
The single most important issue when investing in a buy to let property is to consider your target tenants’ needs. After all, you’re not buying the property for you to live in, so try to place yourself in theshoes of the target tenant. Is that the property near local amenities, schools, public transport, central areas and hospitals? Consider the area in general: the overall atmosphere, if it’s a developing area, and research the economic situation of the individuals living there. Especially if you’re investing abroad, you must travel there to see the area, or at least ask for recommendation from individualswho’ve been there. Also consider if the property is in a suitable condition for letting, and what your target tenant may need.
4. Understand how to make a good profit
You can realistically expect a 12-15% net yield from your buy to let property investment, but only if you select wisely. The economic recession has resulted in a large number of foreclosures. BMV properties will be a very attractive investment choice, as the initial purchase price of the property is low, but you’ll expect a more speedy property appreciation and bigger rental yields. While you’ll need to select very carefully with BMV properties, and there are some risksinvolved, they offer nice investment opportunities. With long-term rental properties, you’ll also haveto think about expenses just like the initial improvement, in progress property taxes and occasional repair expenses. If the rental market is nice in your chosen area, you will not need to worry about your property left without tenants for long periods. Overall, try to aim for the most positive incomerealizable from your initial investment, and research your available options.
5. Investigate the risks
Before making a property investment, you must always consider the possible pitfalls. Would you beable to continue your investment if house costs fall dramatically? Some risks with buy to let property investments is that the property will keep empty between tenants, which would lower your rental yields, or that major repairs are required because a tenant damaged your property. By knowing these risks, researching different investment options and selecting your property carefully, you must be able toavoid most of these pitfalls.
6. Think about the future of your investment
When investing in a buy to let property, you must always consider the future of your investment. Are you able to expect economic growth in your chosen area? How could the rental market be in tenyears’ time? Of course, most of these things are impossible to predict, but you must research youroptions as thoroughly as possible. You may also consider the future marketing potential of the property, which may be a viable and successful exit strategy once property costs have increased.