5 Top Tips For First Time Buy-to-Let Investors

Amidst a nationwide property boom showing no signs of slowing down anytime soon, more people are looking to take their first step into property investment.

Continued property price growth, rising rent yields and increasing capital appreciation are all driving factors to the influx of those looking to invest in property.

Although property is a widely used investment strategy, it’s important to understand what makes a good investment so we’ve shared our top five tips to help first-time investors.

1. Know your Budget

This may sound obvious, but make sure you do your research into the financial implications of buying a property and account for all possible additional costs.

Buying a property isn’t just about how much the property purchase price is – you also need to account for taxes such as increased stamp duty taxes and legal fees, alongside on-going maintenance and management costs such as service fees.

You will also usually need a larger deposit to buy a second home than you would if you are buying your first property. You may need a deposit of up to 25% of the property’s value to secure a second mortgage against it.

2. Consider Purchasing an Off-Plan Property

Off-plan properties offer many benefits to investors and continue to be one of the most popular investment assets in the UK. Why? Because you can purchase a new property below market-value with high rental appeal. 

New build properties are also no longer being built simply as a place people can live and call home – they are places residents can work and play too, with many complexes now offering luxury on-site amenities such as gyms, swimming pools, eateries and coffee shops – all of which help landlords charge higher rent for.

3. Location, location, location!

Understand the tenant demand in the local area. What is the current population and is population growth expected?

Are there any wider investment or regeneration plans taking place to drive further investment to your chosen location?

Areas with the highest capital growth tend to include cities undergoing regeneration schemes, transforming neglected areas into financial, creative, and business hubs that attract skilled and young professionals to the area. All of which increases rental demand and yields.

Whether or not you want to rent to students, university towns and cities can also be lucrative locations, as landlords and investors can expect a high level of demand in student-heavy areas which helps drive potential profits.

4. Understand your Potential Returns

Be sure to understand the rental yield for your chosen property.

The rental yield describes your annual rental income as a percentage of the total value of the property and is one of the most important considerations for any new or existing buy-to-let landlord.

It helps you determine whether a property is a good investment, and is also used to determine the affordability of buy-to-let mortgages.

One of the many benefits of investing in off-plan properties is that often developers offer a rental guarantee for the first few years.

Additionally, look at the property market forecast for your chosen location and understand the forecasted capital growth within the area.

For example, if you’re looking to purchase a property in a UK city with increasing tenant demand and have been guaranteed a 6% rental yield for the first two years, the likelihood of you making this a positive investment is in your favour.

But remember, economic changes can happen overnight which can impact the market or your personal circumstances, and you need to be prepared to be able to withstand the on-going costs of the property and mortgage payments either way.

5. Invest with a Trusted Company

Make sure you invest with a company you trust, that will provide tailored support from your initial enquiry, right the way through to receiving the keys.

Haüskey specialises in the sale of off-plan properties worldwide and will be happy to help you with your purchase, every step of the way.

If you would like to talk further about property investment, feel free to set up a no obligation call with our highly experienced team.

Contact Nathaniel

E: [email protected]

T: +44 (0) 7713 965 470

T: +44 (0) 161 529 9401