There are a number of considerations investors need to be aware of when it comes to their next buy-to-let (BTL) venture. The past 12 months have seen the industry change and fluctuate, opening up a tonne of avenues for amateur investors to get on board. For those new to the property scene, it is best to pick up as many tips as possible. Fully understanding what is to be expected going forward is the best policy for succeeding now and in the future.
First of all, the location should always be the main talking point. Knowing which areas are most profitable is key to planning out that first investment. Just recently, a list released by CIA Landlords highlights Brighton, Bangor, Portsmouth, Leeds and Lancaster as the most profitable. In opposition, only six locations led to capital growth within London. Going straight in with an investment without the necessary research is a dangerous game to play; therefore, we always recommend getting clued up and fully understanding the associated risks beforehand.
Although these locations may be highly desirable, they may not always lead to guaranteed profit. Newer investors should be realistic with their goals. Property investment is a long-term game – especially with BTL – so there is no ‘overnight success.’ For example, an investor will need at least a 25% cash deposit for any typical BTL mortgage and a good credit rating. A proper plan is needed with critical thinking that covers every angle.
According to Which, lenders launched 200 new mortgage deals last month alone. Understanding which option is best for you is crucial to how well a development can turn out, as it will impact your financial returns. Receiving help in the form of a master broker can be a significant boost to any new or even seasoned investor. Lucy Barrett of Vantage Finance, for example, is an excellent asset to have. Her company was named the ‘Buy-to-let Broker of the Year’ at the Commercial Broker Awards in 2020 – a testament to the quality of her team’s work with others. In addition, she is a member of Nicholas Wallwork’s personal power team, having advised and secured his funding on many of his property investments.
Guarantees, as well as assured rents, are also worth researching before going ahead with a development. The Financial Conduct Authority (FCA) monitors and regulates rents and returns, with there being legalities involved for companies to comply with promoting them. On the other hand, assisted rents are sometimes included within the price of new developments, but can be used to manipulate the property’s value. Looking into these aspects in more detail and questioning them concerning your development will be vital to getting the complete picture.
Lastly, it is essential to note all of the exit options available. Knowing which is best will be down to each developer, but having this planned out will be helpful in the long term. Whether you consider selling the property, finding a commercial mortgage to take over or even using cash to pay off the loan, an exit option is always needed. Before establishing any sort of finance, be sure to insert a realistic option related to the property’s sale or acquire a long term mortgage just in case.
If you would like more advice on property financing for your BTL venture or want to assess your options regarding another property investment, make sure you subscribe to Nicholas Wallwork’s YouTube channel. Here you can access great FREE content dedicated to property and property financing. Just look for his Property Finance playlist.