“When purchasing a property for buy-to-let purposes it’s important to buy smart,” says co-owner of Belvoir Liverpool West Derby and Belvoir Liverpool Central Adam Rastall.
“The property itself is a powerful tool in the success of a buy-to-let journey so it’s crucial to carry out the necessary research before you commit, plus think carefully about the key pointers that may indicate a property is potentially a poor investment choice…”
Sum it up
“Buying an over-priced property will inevitably affect achievable profit so it’s essential to fully research the local market to ensure you’re not paying more than its true value,” advises Adam.
“Compare and contrast similar properties to let too in order to discover the likely rental return. Will the potential incomings and expected financial commitments plus outgoings add up to make that particular property a viable investment?”
Supply and demand
“Tenant demand dictates how quickly a property will let and, to some extent, the achievable rental return so if there is little tenant demand for the type of property you’re considering then its investment appeal will be greatly reduced,” says Adam.
“Before narrowing your property search it’s vital that you understand who your target tenant is and what they want. Always check out local demand for the type of property you’re looking at, plus ensure that the market isn’t already saturated with similar properties still waiting to be let.”
On location
“Location can affect a property’s desirability so it’s important to research an area with care,” says Adam. “Perhaps visit at different times of the day and week in order to get a complete overview of the surrounding neighbourhood.
“Also think about what the local area has to offer. Most tenants will want to be in close proximity to local amenities, such as restaurants, shops and schools. Many will want access to major road networks and transport links too.
“If the property’s location won’t appeal to your target tenant then it’s probably not the right property for you.”
Costly conversions
“Renovation projects don’t automatically make poor investment choices but it’s important that you fully understand the extent of restoration or conversion needed to get it ready for the rental market, plus expected costs and timescales,” says Adam.
“Be aware also that if a property isn’t currently rental ready you won’t see an immediate return on your investment and the property will remain empty until it’s ready to let.”
Ongoing issues
“All properties will need maintaining from time to time but if a property has signs of serious long-standing maintenance issues that aren’t easy to resolve in full then it may be wise to think again,” says Adam.
“Major ongoing problems are likely to affect a tenant’s enjoyment of the property and may lead to a very unhappy tenant who’s repeatedly reporting issues.
“Additionally, ongoing maintenance problems can be pricey. Potential call out fees, contractor costs and possible loss of rent while work is undertaken should be recognised, plus it’s important to ask yourself how long-term damage to the fabric of a property will affect its resale value.”
Listen and learn
An agent can be a useful ally in the fight against choosing the wrong investment property.
“Whether you’re searching for your first investment or looking to grow your existing property portfolio your local letting agent should be able to guide you in your search,” says Adam.
“As industry experts with extensive knowledge of the local market they will be extremely well-informed about the key aspects of buy-to-let success, including location desirability, tenant demand, potential rental return and possible maintenance needs.
“Ask your local agent to advise you before you commit and, if they warn a certain property may not be the best investment choice for you, then this is an important indicator that further consideration is needed.”
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Daniel Peacock