Regardless of whether you are looking for rental yields or long term capital growth, investing in property requires some hard work. In this article, we will look at the potential….or not, of making any meaningful amounts of money.
If you are contemplating purchasing buy-to-let properties as a serious long term investment, then no doubt you are looking to know the answer to the most important question: Am I going to make any money?
Well, if you get it right, the simple answer is yes!
Just now, the press is speculating that investment in buy to let properties will cause a 30% increase in house prices, due to the changes in pension laws, removing the need to spend an entire pension pot on an annuity.
However, making money in buy to let investment means getting it right: putting in the time and effort in terms of initial research, Buy to Let Mortgage finance and on-going tenant and property maintenance.
In the world of buy to let investment, there are of course the “dabblers” who buy just one buy to let property, 200 miles from where they live, in an area that they know nothing about. The property is then “given” to a letting agent that is supposed to find suitable tenants, manage the tenant and, most importantly, ensure that the property is maintained.
Many owners abdicate their responsibilities in this way. Unfortunately, only what gets monitored tends to get done and when owners are not actively involved in managing their investment, voids become more frequent and maintenance bills mount up. Quite often, the whole thing becomes far too much hassle and properties are often sold within five years of purchase, which is not long enough to make it a worthwhile investment.
“The people who make real money in buy to let investment are those with multiple properties, who buy and are actively involved with their properties over 10-15 years or more”, says Norman Phillips, of Let Property Strategies, the property investment arm of Enhanced Wealth Ltd.
Norman went on to say that his most successful investors regularly scrutinize their buy to let investment properties, looking for ways to improve occupancy rates, checking up on property maintenance and, of course, always looking to get a better buy to let mortgage deal; all of which help to maximize income.
“Our successful investors tend to be those who take all emotion from the equation, which means that, for them, it’s all in the numbers”, said Norman.