With savings rates at rock-bottom and stock markets remaining volatile, it’s perhaps no surprise that more and more investors are turning to property. The Daily Mail recently reported that ‘despite the potential for costs to rise, lower house prices, rising rents and improving mortgage deals are tempting investors once more.’
While buy to let can offer a range of benefits, it’s important that you take care if you’re considering investing in property. Here are our 3 Buy To Let tips to getting started in the property investment market.
“If you’re thinking of investing in property it’s important that you do your research and you understand the risks and the potential returns,” says Islay Robinson, CEO of London mortgage advisor Enness Private Clients.
“For example, is it really the best use of your capital? Many investors want to buy a property for cash but actually taking out a mortgage can offer a number of tax benefits. In addition, is property likely to generate your best return? It may be higher than a savings account but you’re tying up your capital in an asset that may fall in value.”
Buying a property also ties your capital up in an asset that can be difficult to liquidate. Unlike investments which you can generally cash in straight away a property may take months or even years to sell.
The Daily Mail says ‘do not just walk into your bank and building society and ask for a mortgage. It sounds obvious, but people who do this when they need a financial product are one of the reasons why banks make billions in profit.’
“There is a wide choice of buy to let options and so it pays to speak to an expert,” says Mr Robinson, the high value mortgage expert. “Different lenders have different criteria and so it is a more complex market than many people think.
“For example, many buy to let lenders will simply base their loan size on the rental income of the property. However, others will be more flexible and take your own income and asset situation into consideration. A buy to let broker will be able to help you find the right product for you.”
As a buy-to-let investor you have the same advantage as a first-time buyer when it comes to negotiating a great deal on a property.
If you are not in a chain or you’re not reliant on selling a property in order to buy another then you are in a strong position to buy. This can be a major asset when negotiating a discount, especially in a tough market such as the one we have now.
“The key is to have your buy to let mortgage in place and be ready to move fast,” says Mr Robinson from Enness Private Clients. “If you’re not in a chain, you can prove your finance and you can move quickly then it puts you in an excellent position in a competitive market. You may also be able to negotiate a great price for the property that you want to buy.”