Buying your first Buy to Let investment property in Crawley
Buy-to-let lending has soared by 32% year-on-year, according to the Council of Mortgage Lenders (CML) (http://www.cml.org.uk/cml/media/press/3204). At Inspire Estate Agents we have certainly seen a strong demand from buy to let investors. Rents have continued to rise this year in Crawley with demand from tenants far out stripping supply of property coming to the market.
If you are new to buy to let there are some key considerations you need to take into account when you embark on your first purchase.
1) Rental Yield - When buying an investment property the key is to buy at the correct price and know the exact rent you can expect to achieve. The rental yield is a term used to describe a property’s annual rental income as a percentage of its current value and can provide an indication of how positive your investment is likely to perform in the future.
2) Is the property freehold or leasehold? Generally most flats or maisonette's are leasehold. If the property is leasehold you need to be checking the length of lease remaining - Generally lenders require 40-50 years + the length of the mortgage. I would personally then want another 10-15 years on top so 85-90 years remaining on the lease. You also need to be aware of the maintenance charges as these eat into your return and to check that there are no restrictions on letting the property out in the lease or will the management company charge you for the privilege of letting out!
3) Choose a promising area - This does not mean buying in the most expensive area, its looking at advantages of the area that tenants like - i.e transport links is the Fastway bus route nearby, or train station? Is there parking and what schooling is there if it is a family style property?
4) Re-sale - When setting of on your buy to let project you need to consider an exit strategy. If you are looking at buy to let it needs to really be a long term project to reap the benefits, however when you do come to sell you want a property that hopefully will have grown in value and will be saleable.
Buy to let like any investment comes with no guarantees, so you must research then research some more, before making your first purchase.
Inspire Estate Agents carry out property sales and lettings and welcome any questions or advice on buying an investment property to rent out.