Current high rental demand in the UK can help you grow your property portfolio
Demand for property in the UK is increasing – and supply isn’t keeping pace.
Data from ARLA Propertymark revealed a rise of 8% in March this year of tenants looking for property, and the same data showed that in the same month, 23% of tenants experienced rent rises – the highest proportion since September 2017.
Supply failing to keep up with demand is creating strong business opportunities for investors. As a result, many property investors are using profits gained from current rentals to fund deposits for further properties to add to their portfolios.
Here are a few tips if you’re thinking of expanding your buy-to-let property business.
Buy at below market value
If you know there’s high rental demand in an area, look out for properties that can be snapped up for below their market value. The reason for lower prices is usually because some work is needed to modernise the property such as new central heating systems or bathroom/kitchen renovations.
Talk to local estate agents and have a look at the Land Registry website to research prices in your chosen location and check out similar properties that have sold recently. Then see if there are any bargains to be had.
In towns or cities where there’s a waiting list of tenants, it’s worth refurbishing a property to appeal to the rental demographic in that location.
A property with all around appeal
One thing buy-to-let investors need to avoid is empty properties. And the way to prevent void periods is to invest in a home that will appeal to multiple types of tenants.
For instance, you may find a property that could be suitable for a large family, a group of students or offer plenty of space for a professional couple. The objective is to appeal to as wide a range of potential renters as possible.
Be wary of buying homes for a specialist market as you could find yourself short of tenants suitable for your particular kind of property.
Generate a positive cash flow
To generate income, you should invest in properties with positive cash flow and a high rental yield.
Deduct all costs such as mortgage interest, maintenance and any management fees from your gross rental income to calculate your cash flow. Now think about what you can do with this income rather than leaving it in the bank to do nothing.
Talk to property experts about investment strategies that will meet your objectives and speak to buy-to-let mortgage brokers about the best deals around. Also, find a decent accountant to advise you on how to minimise your tax liabilities.
Look for areas of growth
Currently, there are cities in the Midlands and North of England that are ideal for buy-to-let investors thanks to regeneration plans and sizeable investment in infrastructure.
Don’t look at figures for the UK as a whole, instead focus on what’s going on in a particular town or city. You’ll find that there are many locations that are ripe for investment, offering considerable potential for capital growth and high rental yields.
Would you like to learn more about property investment?
At PMA we run a Mentoring Programme to show you how to invest in property as well as a range of courses aimed at beginners and seasoned property investors.
Keen to discover new property investment strategies?
Then register for our Introductory Property Foundations Course
3 Days and 12 Strategies
The Property Foundations course will help you understand the different property investment strategies you can use in today’s property market.
Dates: 20, 21 & 22 July 2018
Venue: Park Inn Hotel, Heathrow
Pre-register for your early-bird ticket here and receive up to 30% off