I was Speaking to a client not so long ago about how she made her way into property investing.
Being a property investor was something of a distant dream, one in which she feared she may never reach. A belief that you must be financially wealthy to start investing in property had held her back for years and it got me thinking.
How many other inspiring property investors are out there, unaware of the different avenues available to them.
I want to cover one of them in this blog.
Many of you will have heard of a Buy to Let mortgage but do you know how what it really means or how they work?
What is a Buy to Let?
Buy to let essentially is purchasing a property for the purposes of letting it out to a tenant. The investor then creates an income from the rent paid by their tenant.
So, you would purchase the property, find a tenant with an agreement of monthly rental payments. This would cover the re-payments on the loan and go on to receive a return on your investment through those rental payments. You can find out more about re-payments by clicking here
Over time if you decide to sell the property when valuation reveals an attractive price, you could maximise your investment through capital growth. This means that the value of your property has increased over that time, allowing you to sell the property for a higher amount than your original purchase.
Of course, though like everything, there are pros and cons that must be considered.
The Pros & Cons of Buy to Let Properties.
Investing in property to rent can be lucrative, offering a lot of potential to those who wish to increase their cash flow over time.
However, as a first-time investor, buy to let can seem daunting and a lot of work. It wouldn’t surprise me if you were wondering whether this option is worth it.
The UK property market is currently, as some would say ‘booming’. With house prices on the rise and rental costs increasing, it offers investor the chance to make some great returns. Plus, the demand for rental homes is growing, with city centres seeing a shortage of properties available to meet that demand.
Before you get ahead of yourself you need to know what to look out for when selecting Buy to Let properties. You need to build a strategy and make sure you know how to identify the best buy to let opportunities and to also understand the risk that come with renting out property.
One of the main considerations would be your rental yield. You would not want to be in a position of purchasing property and investing in refurbishments to then find that the expected rental amount will not give you the kind of income you desired.
You also need to consider the tenant demand. Without demand for your property, you may struggle to secure any tenants and could be left losing income through those empty periods. You also want to consider the type of tenant that will occupy your property as this can come with its additional problems.
All in all, investing in Buy to Let property can be extremely lucrative, gaining a return on investment not just from your income in rent, but also the sale value of your property.
Having assets that generate monthly income is clearly enticing, but you must do your homework and ensure that this is the right avenue for you.
If you want to know more about Buy to Let mortgages you can read that here.
Or contact us either by email or phone.