Across the UK buy-to-let investments are considered a savvy choice
when it comes to maximising returns. This standing is fuelled by high profile buy-to-let magnates such as Fergus and Judith Wilson, the couple who recently sold their 900 property strong Kent portfolio to the tune of £250 million. So how can you get involved in the buy-to-let market and enjoy your slice of opportunity?
Read on for our guide to kicking off your buy-to-let venture, and arming yourself with the biggest possible chances at success:
Look for up and coming markets
Maximise ROI by purchasing buy-to-let properties in up and coming markets where prices are likely to rise. As well as a steady increase in prices over the past few years look for new local developments, public transport plans, new schools and so on. Ultimately, choose a location where your cash is likely to perform at its absolute best.
Know the rules
The rules are changing for buy-to-let investments and it’s critical to have a comprehensive understanding of what you’re getting into. There’s a tax rise on its way, as buy-to-let interest relief is replaced in favour of a 20% tax credit. From April 2016 landlords will also be slapped with an additional 3% stamp duty on buy-to-let property purchases.
Track down a good lender
Regardless of how appealing your bank’s offer is, take the time to research all avenues. Mortgage brokers are often a good bet as they’ll offer you a broad range of options and will be able to help you weigh up what’s best for your individual needs.
Don’t let emotions rule
It’s important to remember that your needs and wants may not necessarily align with a savvy investment. Sure, you may not like the idea of living in a one-bedroom apartment but at the end of the day, you’re buying-to-let, not buying-to-live. It’s often the more undesirable properties that offer the best returns so don’t let your emotions rule when it comes to signing on the dotted line.
Focus on yield
Experts assert that rather than investing for short term capital growth buy-to-let landlords should focus on income. Calculate annual ROI by subtracting your annual mortgage cost from your annual rent. Then calculate yield as a percentage of the purchase price. For example, a property that cost £200,000 and generates £10,000 worth of annual rent will have a 5% yield.
Do you want to take the plunge into the buy-to-let market? Get in touch with our CDS team today for a bespoke consultation on how we can help.