Whether expanding an already successful portfolio of properties or looking at your first purchase, buying a property as an investment can seem like a very daunting process. When looking to invest there is a huge amount to think about regarding the current market, the area to invest in, mortgage repayments, nightmare tenants and general risk and return for both capital and rental yield.
Here are five things to consider when buying a property to ensure maximum return on your investment.
1. Choosing The Right City. The right area to buy is not always down the road or even in the same city. It is potential growth that you are looking for, not just which city is currently thriving, especially if the investment is long term. Although the history of real estate in the area can be useful it if the next 10 years rather than the last 10 years you need to focus on. For example the new transport links between Bristol and London next year making the journey just 78 minutes means that Bristol house prices are expected to soar due to demand from commuters.
2. Know Your Strategy. Buy-to-let has been featured in the news a lot in the recent months; at a time of low interest rates and unstable stock markets many are turning to property as an attractive and (relatively!) safe investment. There is also the new category of buy-to-let investments to let exclusively on Airbnb which definitely has its PERKS. This rental option is not only the most lucrative on a nightly basis but also gives you freedom with your property that no other rental option offers. You have the ability to block out dates and to only take bookings as far in advance as you would like. Property Management Companies offering cleaning, maintenance and 24 hour service’s for a tiny percentage of the booking make this option easier than ever for landlords.
3. Property Type. This will depend hugely on your strategy. Houses rather than flats or apartments tend to gain capital growth and landlords are cashing in when they sell up. Smaller units like flats, apartments and HMO units are going to make more or a return through the rental yield. This can be through renting a shared house to students or again on Airbnb.
4. Know Your Target Tenants. Your choice of tenant should influence the location of the property and the type of property you invest in. A central city pad close to local attractions, bars and restaurants will be very attractive to young professionals. A quieter, more suburban location is likely to attract a very different type of person and perhaps even some families. Are there large companies nearby which could make your property an even more attractive option?
5. Know the Pit Falls. Rent might be up and the mortgage market might be good but that does not guarantee financial success. As well as the points mentioned above a landlord must also factor in the costs, especially in the start up periods or when the property is empty between tenants. Landlords will need to consider operating costs which are difficult to plan for such as fixing a broken boiler. Costs like this as well as the occasional nightmare tenant can bring in huge maintenance bills, irregular payments (or no payments is some instances) and even legal costs. There are ways to avoid these problems too with management companies like Air 360 in Bristol offering to be your dream tenants! If you are able to commit your property for a year they will rent the property for above market value guaranteed rent 52 weeks of the year. This care free option offers complete peace of mind as you get paid whether the place is occupied or not and the management company takes care of the property and the tenants, taking on the landlord’s responsibilities.
If you are looking at buying an investment property and would like some tailored advice waterspropertysearch are the experts in the Bristol and Bath area and would love to help.
If you have already found your investment and are interested in the short term letting option using Airbnb please contact Air 360 for an insight into demand in the area and affordable management options.