"Rental demand will nearly double inside 10 years" Source - Centre for Economic Business Research.
If there has ever been a way to make money easily or a way to lose it easily, then letting property is the way. Choosing the right property in the right area is vital.
Currently the North East of England is one of the Buy to Let capitals of Europe and whilst the rest of the country in general may have experienced a slow down, we at Property Finders North East firmly believe that prices in the North will continue to climb for the next few years. Due mainly to the fact that many of the area's we buy in have had only steady increases over the past three or four years. FACT - Property prices double every 7 to 10 years and have done so since the early 1900's.
Letting property is of course not new, it has been going on for thousands of years. But now, due to the improved availability of loan finance, buying property to let is open to most people. People like you! Additionally, the performance of other more conventional types of investment has been somewhat volatile and alternatives are being sought by the shrewd and novice investor.
However, care has to be taken that a flood of new landlords will not outstrip the demand from tenants. However, unlike other European countries, our population is expanding significantly, predicted to reach 63 million by 2016 compared to 58.8 million in 1996. Also the number of people living by themselves is increasing due to the divorce rate and a general change in social trends, as more people live by themselves. The number of households in the UK is predicted to increase from 20 to 26 million by 2020.
There are many considerations when investing in Buy to Let and we at Property Finders North East hope to be able to help you in your quest to become a successful landlord. (We are a member of the RLA - Residential Landlords Association)
The Main Issues
It is vital that you should be clear at the outset of your objectives. The four most common reasons for investing in a Buy to Let property are:
To produce capital growth
To produce an income stream
To combine income and growth
To produce capital growth or to combine income and growth
In our opinion, any property purchase which has, as part of the rationale, a speculative or high element of capital growth, requires very special skills and knowledge. These are the skills of a property developer or a speculator rather than those of a landlord.
If the income stream produced out of a property represents a poor return on capital it may have to be supported by growth in value of the property, in order to produce an acceptable return. This is not unreasonable and in certain parts of the country (The North East being one of them) this is a very important part of the decision to buy.
Local knowledge is absolutely vital if capital growth is your objective. That's why our clients rely on Property Finders North East to help them in this regard.
There are many questions that you need to have a clear view on:-
Am I buying at value for money?
Is it over or under-priced?
What is the immediate area like?
What are the risks to negative equity if prices reduce?
How long you intend to hold on to the property is an important issue too. Is it for a quick return or are you prepared to hold on to the property through times of price fluctuation (including maybe a negative equity period). Remember that if the rental cover does not produce enough to cover your mortgage then you will still be liable for any mortgage commitments on the property. That is why we at Property Finders North East make sure that any investment property you purchase 'Stacks Up' in terms of the rent covering the mortgage (based on 15% deposit) at the time of purchase. We will advise you on rents achievable in the area based on our local knowledge and information given to us by local Management and Lettings companies.
We source a mixture of Buy to Let properties in area's where, in our opinion, are best positioned for growth.
GEARING your capital can help the situation considerably. For example, if you buy outright with no loans, then a 5% increase in capital value gives you naturally enough for a 5% return on your capital. However, if you can get away with a 15% deposit and only borrow 85% ( which is the norm), and if rent covers the cost of borrowing, then a 5% increase in the value of the property represents a 33% increase in your original investment! ( 5% / 15% is 33% ).
To produce an income stream
If it is done correctly, Buy-to-Let will produce a regular stream of income, which should not fluctuate greatly and should produce an excellent return on capital. It need not present a great risk to achieve this and certainly not one any greater, and in fact usually much less, than alternative investments in stock markets and unit trusts.
How can Property Finders North East Help You?
We are successful landlords ourselves. We aim to help people, whether they are novice or experienced investors, to build their property portfolio's. We do not claim to know everything there is to know about Buy to Let, but can assure you of our best attention and advice at all times.
Why pay small fortunes on investment clubs and/or residential courses when you can simply buy the right type of properties from us at Property Finders North East.
We do not charge arrangement or finders fees!
We are simply an estate agent who has a knowledge of the Buy to let market.
You should take independent advice on any investment but at Property Finders North East we will give you honest, reliable information on all of the above. Feel free to call us on freephone 08000 82 85 85
