Buying a second property can be a very effective way of generating additional income for a relatively small initial outlay. Capital Property Lists search on your behalf for properties which may give the returns necessary to make good rental investments. We search for properties which will give the best possible percentage returns for your investment. (Rental as a percentage of the purchase price of the property before deduction of service charges and any additional costs.)
There are many mortgages on the market specifically intended for purchase of properties for investment.
Tips for purchase of rental investment properties:
1 Know your rental market. Spend time researching the rental markets in the areas of interest. It is important to develop an accurate idea of the possible range of rent achievable from any property.
We have a book available to help you decide on the best areas and likely rental yields.
2 Finance. If you require finance to assist with the purchase of your investment property then this must be taken into consideration when working out whether a particular property will generate a profit.
The minimum deposit required for purchase on “Buy-to-Let” schemes is usually 20% of the purchase price but this will vary from lender to lender. It is usually more difficult to borrow money against ex-local authority flats in tower blocks or flats with short leases remaining although both of these categories can often generate considerably higher rental returns.
We can arrange for an independent mortgage adviser to contact you to explain all the options available.
3 Presentation. The property should be presented and decorated in an appropriate style for the tenants you wish to attract. Whilst new wood floors and modern kitchens are fashionable for many professional lets it may be less appropriate and unnecessary if you intend to let to students.
4 Location. The most desirable locations are not usually the best for rental returns. This is because the purchase prices of properties have risen so high in the most expensive areas. The gross rental returns in areas such as Kensington, Knightsbridge and Pimlico are often too low as a percentage of purchase price to make it possible to finance the purchase and make a profit. Properties close to the best transport links to the City and West End are easiest to let. For properties which are to be let to sharers, the proximity of students may be important: universities, colleges and hospitals usually provide a good supply of tenants.
5 Letting agents. Charges from letting agents vary enormously depending how much work you want them to do. Some will just find you a tenant. Others will also collect the rent and manage the property if there are any problems. They can seem expensive but they may be able to achieve higher rents than you’ll get by advertising privately.