Investment Buyer Tips

So, what do they need to consider when doing so?

• Rental Yield – one of the most important factors when purchasing a property to rent out is the rental yield it will provide, as this will determine whether the property is a good financial investment. The rental yield is the financial return you will receive and can be calculated by dividing your annual rental income by the purchase price of the property (including improvements needing to be carried out now or in the future).
• Future Re-Sale – capital appreciation also needs to be considered when purchasing a property as an investment, as whilst the property will provide an income via the rent, it also presents the opportunity to provide further monetary gain when the property is sold. Whilst this is often dependent on market trends, it is worth noting other property sale prices and the market trend of the area that the property is situated in.
• Age & Condition Of Property – older properties will naturally require a higher level of maintenance, with issues more likely to occur in comparison to a newer property. Furthermore, rental properties must have an Energy Performance Certificate (EPC) rating of an E or above, in order to be let (as of 2020), with further plans to increase the rating required in the future, with the aim of improving the energy performance standard of rental properties. Therefore this is worth noting if you are considering purchasing an older property or a property in need of refurbishment.
• Financing – when investing in a property with the intention to let, mortgage lenders will require a higher level of deposit, which is normally 25% or more of the overall purchase price. Given the purpose of investing in property is often for financial reasons, we would advise any investment buyer to shop around, with mortgage advisors in the best position to assist with this, as your bank may not offer you the best rate. Whilst some buyers invest in properties using cash, taking out a mortgage can allow you to invest in more properties using the cash for multiple deposits, with the rental income offsetting the mortgage payments.
• Audience / Interest – it is important to consider who the property will appeal to, as this will dictate how quickly the property will rent out, as well as the turnover you may experience. For example, a two-bedroom home may appeal to single people or couples and will require a lower rental amount in comparison to a four-bedroom detached home which will appeal to families. Turnover may also differ dependent on the property type, as a family may stay longer in a four-bedroom home than a couple would stay in a two-bedroom home, with plans to start to a family and upsize. This may create periods of time where the property is empty and rental income is not being received.
• Managing The Property – letting agents offer differing services including the potential management of the property once a tenant has been secured. Whilst the management of the property will come at a cost, this will relieve the daily stress that self-managing a property can create with the agent on hand to liaise directly with the tenant regarding any issues. All of our landlord services can be found here: https://www.newtonfallowell.co.uk/peterborough-estate-agents/landlords/landlord-fees/
• Rent Guarantee Policy – whilst the letting agent will endeavour to secure the best possible tenant for your property and the referencing process will aid with this, ultimately circumstances can change which could lead to your tenant not being able to pay the rent. Rent Guarantee policies can be of utmost importance in this situation, as they will act as an insurance policy to cover the rental amount not being received, ensuring you are not out of pocket and avoiding your potential rental payments not being covered.

To register your buy to let property requirements with our team, or if you have any questions about investing your money in property, then please give our team a call on 01733 511225 or email peterborough@newtonfallowell.co.uk