Lucy Alexander - invest with interest and property of the month
PUBLISHED: 13:11 23 December 2013 | UPDATED: 13:13 23 December 2013
There's still money to be made in the buy-to-let market if you follow my tips on where, what and how
The buy-to-let market may have experienced a dip in recent years but if you have enough cash for a sizable deposit, property investment can still give a better return on your money than the low interest savings accounts currently on offer. The key to making an investment profitable is to pick the right property, in the right location, at the right price. Using my experience from Homes Under the Hammer and personal knowledge as a property investor, here are my top tips for planning a profitable investment.
Sorting the sums
Before you start to view properties or look at auction catalogues, it is important to do your maths. Buy-to-let mortgage lenders are currently asking for deposits in excess of 25% and will want to see evidence that the property will yield a rent that more than covers the mortgage repayments. It is also important that you have sufficient reserves for any unexpected gaps between tenancy agreements or for any emergency repairs, such as the boiler breaking down.
Finding the best buy-to-let mortgage deal is also an important first step when deciding if property investment is right for you. These days, buy-to-let products are being offered at considerably higher interest rates than residential deals and therefore it is important to seek the advice of a specialist investment mortgage broker. Websites such as www.knowyourmoney.co.uk and www.moneysupermarket.com are good for getting an indication of what deals are available, however be aware that many will have large arrangement fees so be sure to read the small print.
Know your market
Deciding on where you are going to purchase doesn’t have to be confined to places you are familiar with but what is important is that you consider the benefits of the location. Jay Chitnis, Owner of HJC estate agency says: “The specifics of what a particular area has to offer will strongly influence what kind of tenant will be attracted to your potential letting and I would strongly advise anyone considering an investment property to do their research before making any decisions about where to buy.”
Jay’s advice is sound and is something I always pay close attention to when buying an investment property. For example, one of my buy-to-lets is in the catchment area of four Ofsted ‘outstanding’ schools and as a result has never been without a tenant. Transport links to large towns or cities are a good bet if you want to attract business tenants and properties near large universities can also be a safe choice because the student demographic is unlikely to change dramatically over time.
Bricks and mortar
There is nothing wrong with buying a property which needs a significant amount of refurbishment or building work, just as long as you’ve got a clear idea of how much it will cost to make it habitable. Some of the best investments I’ve seen on Homes Under the Hammer are the ones where the owners have a bagged a bargain, invested some time and money and turned a dive into a des res. However, if you are looking for an immediate rental income, it is best to stick to a property which doesn’t require much more than a lick of paint.
Forsyte Shades, Lilliput Road, Canford Cliffs
Situated next to the renowned Compton Acres gardens, this penthouse apartment offers unrivalled coastal views across Poole harbour. Set high amongst the tree tops, a huge terrace wraps around three sides of this luxurious apartment bringing the outside in. The terrace offers far-reaching views in both the southerly and westerly directions and plenty of space for alfresco dining, sunbathing and entertaining against a backdrop of one of the finest vistas on the south coast.
The passenger lift (via penthouse key) whisks you directly into the reception of the apartment with extended piano area. This leads into the open plan principal living space incorporating state-of-the-art kitchen, dining, lounging and coffee areas and utility room. There is also a separate study which could be used as a fourth bedroom. The en-suite master bedroom features a wardrobe corridor and there are two further guest suites. The penthouse, which is air-conditioned throughout, also has access to the indoor private residents’ pool and comes with a triple and single garage.
The freehold apartment block is set in three acres of beautifully landscaped and wooded grounds overlooking Parkstone Golf Course. Beyond the adjacent Compton Acres, Canford Cliff village with its shops, restaurants and bars is a short walk and Bournemouth and Poole are just over 3 miles away.
Agent: Sotheby’s International; Tel: 01202 709283