It pays to do your home­work be­fore buy­ing a prop­erty to let

Prop­erty ad­vice

Yorkshire Post - Property - - PROPERTY NEWS -

Luke Gid­ney

pa­tience and a will­ing­ness to do the rel­e­vant re­search.

So how do you go about this? First, you need to con­sider whether your pri­or­ity is buy­ing a prop­erty whose value will keep in­creas­ing or one that will give you a greater re­turn on your in­vest­ment year-on-year.

The next step is know­ing your mar­ket. Whether you want to in­vest in an area you know and be hands-on or some­where fur­ther afield where you may need a let­ting agent, you have to know the mar­ket con­di­tions.

Buy­ing a rental prop­erty is point­less if there is no ten­ant de­mand and you do not want to start by pay­ing way over the odds for a home.

This is why do­ing your re­search on an area is so im­por­tant. You need to check the prop­erty sec­tions of the press, visit prop­erty por­tals and do the rounds of the lo­cal let­ting and es­tate agents. Find out what the house prices are and what the go­ing rates for rents are. Speak to the lo­cal agents to gauge likely de­mand for rental prop­erty and ask any­one you know who has in­vested in that area for their opin­ions.

When it comes to in­vest­ing in an area, you have to be ob­jec­tive. Do not be per­suaded to buy a prop­erty be­cause it has a quirky charm. The chances of such things ap­peal­ing to po­ten­tial ten­ants are slim – and ap­peal­ing to ten­ants is what your buy-to-let in­vest­ment de­pends upon.

You must con­cen­trate on lo­ca­tion. Is the prop­erty in the com­muter belt? Are there good pub­lic trans­port links to the near­est towns, city cen­tre or work places? How good are the nearby schools? If you are look­ing to let to stu­dents, how easy is it to reach the col­lege or univer­sity? These ques­tions have to be asked. If the an­swers are not pos­i­tive, it may well be worth look­ing else­where. There is no point in buy­ing a won­der­ful home for buy-to- let if you will strug­gle to let it. If it is not in the right place for your po­ten­tial ten­ants, it is not worth buy­ing. That is the case whether you are look­ing to rent to fam­i­lies, stu­dents or young pro­fes­sion­als.

Dif­fer­ent types of ten­ants bring dif­fer­ent is­sues so you need to know who you are aim­ing for: there are higher risks and higher returns in the stu­dent and house in mul­ti­ple oc­cu­pa­tion (HMO) mar­kets than there are in rent­ing to pro­fes­sion­als. You have to de­cide on your tar­get mar­ket.

Once a lo­ca­tion has been de­cided upon, there is no rea­son to buy the first prop­erty that ap­pears on the mar­ket. A house may tick the boxes that we have just out­lined but that is no guar­an­tee that it is ideal.

For ex­am­ple, what are the neigh­bours like? Try­ing to keep a prop­erty rented that is next door to noisy, un­tidy or ag­gres­sive neigh­bours is a strug­gle. Ten­ants will never stay long, mean­ing a loss of rental in­come and strug­gles to find re­place­ments.

How­ever, it can pay to set­tle for less than per­fect when it comes to the con­di­tion of a house. If a prop­erty meets the cri­te­ria but is in poor con­di­tion, it could be an op­por­tu­nity. It may cost thou­sands to bring it up to stan­dard, but if that is re­flected in the ask­ing price it could prove a sound in­vest­ment. What­ever the type of prop­erty, be me­thod­i­cal. Work out how much cap­i­tal you can in­vest in it, what sort of yield you are look­ing for and what the likely re­pair and main­te­nance costs will be.

Luke Gid­ney is founder of let­ting agency Let Leeds, letleeds.com

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