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July 17, 2012

Buy-to-let investment: not easy money

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Written by: admin

Buy-to-let investment has been a boom industry in recent months, with credit restrictions felt by first-time buyers leading to a rise in rental demand and an increase in available properties for investors.

While it is true that buy-to-let investment is an attractive way to look after assets and plan for a financial future, it would be wrong to suggest that it is easy money. Model Works suggests that some of the data used to promote by-to-let investment is exaggerated, while there are the first signs that rents may be reaching the peak of affordability as the number of tenants in severe arrears has been rising.

So if you’re considering buy to let investment, you need to consider a few things – starting with research. It is important to identify the right are for a let, which does not necessarily mean the place where properties are cheapest. A range of factors – including local amenities, transport links and schools – decide how desirable a property is. It is important to get the right balance.

While a rental property is an asset, it also needs to make income on a month-by-month basis to be viable, so look at what you can achieve in terms of rental value and subtract costs, which include mortgage payments, tax and essential landlords insurance from a reputable provider. If the sums do not work out, you should look elsewhere.

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