Smart Tips for the Buy-To-Let Investor

Despite the recent economic downturn and credit crunch, investing in buy-to-let properties is still undeniably a wise and profitable investment. There are more start-up families in the United Kingdom nowadays who can no longer afford to purchase their first homes but instead choose to rent for the meantime. With interest rates becoming all the more restrictive, people are choosing to forego purchasing their dream homes for the meantime. Thus, despite the recent downturn of events, there is still a huge market for buy-to-let properties – definitely good news for the investors.

In fact, many property investors have already earned hefty incomes and reaped the benefits from buy-to-let. Landlords have the potential to comfortably earn a healthy monthly income, as they can traditionally charge rental payments covering around 125% of total mortgage payments. With the times a-changing, some banks are also increasing their strict criteria. Instead of the traditionally high loan to values, banks have tightened up on lending by asking for larger deposits. Still, there is profit to be made in buy-to-let investments for those with a medium to long term investment horizon and an eye for below market value property bargains.

The relatively high price of property and the continued increase in interest rates demand that the buy-to-let investor be a savvy businessman or woman. A good rule of thumb is that first-time investors should beware of ‘easy’ deals. In the world of property investment, there is often no such thing as too good to be true. Moreover, novice investors should make sure that their investment stands the rigorous standards and tests needed. Does it have a good potential rental income? Can it easily be resold? Is the property attractive to your target market?

For first time buy-to-let investors, the tough times mean some tricky challenges that call for wise decision-making. Here are some smart and helpful tips to help you on the way to a successful buy-to-let:

* Make sure that the figures add up. With the average residential property in London costing around £313,000 (according to Halifax), purchasing a buy to let property is not cheap in some areas. Undeniably, potential landlords are faced with an easier time than three years ago in terms of rental demand and the availability of bargain properties. It would be wise for a landlord to lower the traditional computations for rental income vis-à-vis mortgage repayments and deposit rates to meet the demands and the needs of the market. Do the math properly and maintain the delicate balance between having a steady monthly income while keeping your property affordable and feasible to the market. Above all, a landlord should ensure that his property is occupied most of the time. Gaps between tenancies could become quite burdensome, especially if you have high mortgage payments.

* Know the market. Choose your property with your potential tenant in mind. A residential property in a busy area (near universities, the airport, public transport routes, retail hubs) is often a safe and easy choice. Research the area and see what the market is like. People generally want to live in an area close to accessible transport links, nice restaurants and good retail areas.

* Most importantly of all, buy below market value from distressed sellers facing repossession, divorce, emigration and other problems that tend to lead to property being sold at below market prices.

Parmdeep Vadesha is a property investment expert and founder of the largest community of property entrepreneurs on the web who buy below market value properties from distressed homeowners facing repossession, divorce and bankruptcy. He writes a monthly newsletter for over 70,000 property investors worldwide - http://www.Property-System.com

Article Source: Smart Tips for the Buy-To-Let Investor

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Smart Tips for the Buy-To-Let Investor

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