Everything you need to know about investing in property from purchase to let.
Everything you need to know about investing in property from purchase to let.
A fantastic 2 bedroom executive apartment in the fashionable ‘Vision’ development, we sold this property to a first time investor through our residential department and then once the sale had gone through found a tenant at £1500 PCM rent within a few days of completion.
The apartment is let fully furnished and achieves a yield of close to 6% as well as having excellent prospects for capital growth, it is walking distance from both the shopping centre and mainline railway station servicing London Euston.
Our client contacted us as they were looking to add more property to there existing portfolio in Milton Keynes, we were able to show them this townhouse in the popular location of Oxley Park, with two bathrooms and plenty of parking it was a perfect property for let.
After agreeing the purchase we were able to gain access for viewings easily and the house was let within just a few days. If you are looking to build your portfolio and need advice on the right mix of property, the best areas or any other elements of investment then we are always glad to help.
As the sole selling agents for this scheme of studio, 1 & 2 bedroom apartments within walking distance of CMK station, we were able to offer our clients an exclusive investment opportunity.
This meant our landlords had an amazing opportunity to purchase and take advantage of the builders marketing efforts to attract tenants and achieve excellent rents, mostly within days of completion. Having control of a huge majority of the apartments and with an existing relationship with the freeholder, will also make dealing with any issues in the future much easier.
After finding an amazing new home for these clients, they realised it may be much more financially prudent to let out their present family home, this enabled them to avoid issues with a chain and secure the best possible deal from the builder.
For many clients this is a great way into the potential gains from owning two properties, and of course because we make regular inspections if you ever needed to move back, your home will have been well taken care of.
Start Your Search Here
Download our top ten things you should know before buying an investment property.
This depends on what type of property investment you are considering. You can invest in property via funds for a few thousand pounds through to £300,000 or more for a property investment franchise.
Property investment returns vary depending on the type of property investment and typically the time that you invest for. For example, you can invest in Buy to Let (see FAQs below) with around £20-£30k and receive a gross annual return on your investment of 4-7% and average capital growth over a ten-year period of around 5%. However, if you are buying land and building from scratch, depending on market conditions you may be about to gain a 100% return on your investment within 18 months – however this kind of return requires expert knowledge.
The quickest way of making money from property is actually one of the hardest. It’s buying a property you know is at a discount, then immediately selling on at a profit. Not too difficult in a rising market but requires professional experience in a static/falling market. Other fast ways of making money are from self-build or property development which can be turned around in less than 12 months.
They can, but are extremely high risk. You are effectively ‘betting’ that the property market will rise. We have seen in 2008 that doesn’t always work. No money down deals should only be entered into if you are confident in the people that are offering them, they allow you to check their information with your own independent legal and financial advisor. Never enter a ‘no money down’ deal unless you have excess cash to cover losses.
The risks are great. Versus other financial investments, property is a medium to high risk investment. The difference between property and other financial investments is if it goes wrong it can go very wrong. Unlike stocks/shares/pensions if your property investment falls in value or you aren’t able to cover the costs of holding your property investment you have to find MORE money to put in, if you don’t you could lose everything and potentially go bankrupt.
The main benefit that investors see is the opportunity to ‘gear’ the investment through borrowing money, so if you have £50,000 to invest and gain a 10% return, you’ll receive £5,000 gross profit. If you invest £50,000 in a property worth £200,000 and it grows by 10%, you’ll get £20,000 back. However, this only works when property prices are rising, you buy at a substantial (real) discount and/or you wait until the property has grown in value.
It’s unlikely. You can invest in ‘flipping’ property, building property from scratch or renovating property and adding value. This can give you a ‘quick’ profit within a year. However, with the uncertainty around property prices, this increasingly requires professional help which can eat into any profits.
This depends on your attitude to investment risk and how much money you have available to invest. You should seek advice from an Independent Financial Advisor to help you identify the answer to this question.
Property investment as a pension scheme isn’t necessarily the best way to invest your money, mainly because you will lose the tax benefits of investing through a pension scheme which if you are a 40% tax payer can be quite substantial. Check with an Independent Financial Advisor and also with your company pension scheme if you are looking to invest in property versus a pension scheme.
The pros of investing in property is that your choice of what you invest in are typically yours. You can also “touch and feel” your investment, giving you the feeling of more ‘control’. If done well, property investment can deliver some great returns. However, property investment isn’t easy and increasingly requires professional assistance from people/companies that have been investing successfully since the early 1990s.
The downsides of property investment are having to ‘top up’ your investments with cash if they don’t perform and that you are to some extent at the mercy of macro and micro economic conditions. Finally, property investment is complex and not every property, fund, syndicate will deliver. The research required can take weeks and months and the amount of money now required in the UK to invest is in excess of £30k for just one property.
You would normally need a 25% deposit on the property’s value, around £2-3k to make sure the property is legal and fit to let and an on-going investment of £500-£1,000 per year to maintain the property/let. You also need to consider your buying/selling costs, which range from 2-3% to 8-9%.
Buy to let gives two types of return typically over a 10-15-year period. Income from rent which can be 4-12% of your investment and growth from capital which is purely an estimate from historic price information of around 5% per annum OVER A TEN+ YEAR PERIOD.
Buying below market value (BMV) is a ‘buzz word’ that has come from property investment companies. There is often much ‘mystery’ applied to how to buy at BMV and you can pay thousands of pounds for the ‘secret ways of accessing’ properties at BMV. The truth is it isn’t easy and you have to put lots of time aside, make lots of offers, most of which will get rejected! The key to buying properties at below market value is to understand local property prices well enough that you almost instantly know when a property is for sale at below market value.
In a recession you would look to be buying property at least 15% below their true market value at the time of purchase to avoid problems from future price falls and ideally 20% or more. However, to buy at this level of discount you would need to be comfortable with buying off people who are about to be repossessed or are in severe financial difficulties.