Is Buying to Let A Good Investment in Today's Economy?

Back in the late 1990s, investors were being discouraged regarding buying to let as a high-yield investment. At that time, interest rates were low and bank approvals were high. Consumers were purchasing their own homes at a rate significant enough to destroy the rental market. However, a lot has changed since then.

Buy to let UK opportunities are making a quick comeback thanks to a number of different factors. Purchasing residential properties now offers the promise of high yields and a great return on investment over the long haul. For the investor looking at stability and limited volatility, buy to let properties are an excellent option.

What's Driving the Comeback

There are a number of factors driving the resurgence of buying to let investment strategies. They are too numerous to list here entirely, but the most important among them include:

  • Prices - The residential property market continues to offer below market value pricing on the best buy to let properties for sale. As long as property values remain low, this opportunity will remain. A company like Fruitful Property can help you find investments at 25% to 30% below market value.
  • Rental Rates - UK landlords are enjoying steadily rising rental rates throughout the country. In 2012, average rents increased roughly 3.3% even as property values remained flat. By contrast, the average savings account paid interest of less than 1% during the same period.
  • Inventory - Although the number of repossessions is declining while property values are stabilising, there remains ample inventory in just about every region. Investors employing a buying to let strategy have many houses from which to choose. This allows for concentrating in specific geographic locations; a strategy that always maximises returns.

Don't Forget Due Diligence

Although buying to let is a great investment opportunity, do not forget to do your due diligence. There are three main areas investors need to focus on, the first being rental rates by geographic location.

For example, although average rents rose 3.3% in 2012, rents in the London area only rose 1.5%. Investors need to know the amount of rent a given area can sustain before making the investment. The greater the ratio between rental payments and purchase price, the higher your return.

Second, investors need to do their due diligence in terms of property condition. Buying unseen property is an open invitation to purchasing a money pit. Regardless of how your properties are sourced, you need to inspect them yourself or hire an inspector you trust.

Lastly, due diligence is required in researching legal and tax issues. Often times buying to let means purchasing repossession or distressed properties. Many of these come with legal and tax issues that will not be uncovered unless you go digging for them.

We Want to Be Your Partner

At Fruitful Property, we want to be your partner in the buy to let investment arena. We have more than 30 years of combined experience researching and offering only the best properties to our clients. We know where to look, how to look, and what to look for. We are absolutely positive we can source only the best properties for your portfolio.

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Nick Hopkinson

by Nick Hopkinson - Property Investment commentator and Fruitful founding director.

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