Essential Advice that All Property Investors Need to Know

Property investment is one of the most lucrative ways of making your money grow. It’s a great strategy for long term savings and the benefits continue to outweigh the potential challenges. Property continues to be one of the safest investments out there, and bricks and mortar continue to be seen as a valuable asset. Buy to let property investment allows the owner to gain profit in two ways – from the amount made when the property is sold and through regular rental income earned.
Rental yield is one of the most important factors to consider when purchasing a buy to let property. This is a way of measuring how much you can earn from your property every year. Gross rental yield is the whole amount you receive, net rental yield takes expenses into account. By focussing on property with a high rental yield you can make sure you get the best long term returns from your investment. It also means you can contrast widely different properties in an efficient way. For example, a property worth £120,000 with a monthly rent of £500, therefore a yearly rent of £6,000 would have a rental yield of 5%. Compare this with a property that cost £50,000 with a monthly rent of £350 and a yearly rent of £4200, which would be 8.4% gross yield. Sometimes it could be more lucrative to have two cheaper properties with a high yield than one with an average yield.

It’s worth looking at the average rental yield of an area before you invest. This property map of rental yields is a useful source for looking at potential rental yields per area. For example, Liverpool’s L7 postcode has rental yields of 11.79%. Contrast this with the popular London N6 postcode – Highgate – which has a rental yield of 1.5%.
Area can play a huge role in how lucrative a property investment can be so it’s worth carefully considering what the area is currently like and what plans there are for the future. If a university is expanding into a new area, a student property nearby could be a great investment with recurring demand. Hamilton Hub – a development from RW Invest – is a great example of this. In an area currently undergoing extensive regeneration, the price per apartment is surprisingly affordable. Due to the current redevelopment plan, the number of students living in the area should skyrocket – providing a lucrative opportunity for investors.
Following on from this, thinking like a tenant is another essential piece of advice for property investors. To understand whether there will be a demand for your property, it’s worth considering what your ideal tenants will be looking for in a property. If you’re looking for young professionals, then a city centre apartment with easy transport links and a great central location will be vital. If you’re looking for a student property investment, then consider high end purpose-built student accommodation which will potentially attract overseas students with a higher disposable income. It’s also worth looking at how long similar properties in the area are on the market for. If it’s taking months for rental properties to be tenanted that’s probably not the best investment for you. If rental property demand outweighs supply, then you should be able to find tenants easily, and potentially charge more in a competitive market.
Successful property investors take an analytical and measured approach to their investments. Making sure all of the numbers add up, looking at rental yields and researching areas will all help you make better choices in property investment.

No comments