One of the biggest bonuses for buy to let landlords currently, is that the property market to some extent, is absolutely stacked in your favour. As an existing landlord, as long as you have at least a 25% deposit, you can secure:-
And with capital growth, either already kicked in or hopefully on its way, that means the ‘big bucks’ which can be made in property via gearing, could be possible.
However, for some landlords who invested prior to the crash in 2006 and 2007, you are unlikely to be ‘feeling’ wealthy at the moment. Rents have pretty much been static for five years and have, according to the ONS, only grown by 8% over an eight year period. Prices are still down by anything from 15-30% in some areas, such as Manchester, Leeds and Nottingham. And some properties are selling out for 50% of their value at the height!
For those landlords that bought in growing areas in London or bought before 2005, in the main, your buy to let portfolio should be delivering good returns, especially if geared. If you have used cash, you need to check the rents and prices are at least keeping up with inflation. If they aren’t you could actually be losing money.
It makes me laugh that at the start of the year all the property investment companies shout “now is the best year to invest” or “don’t get left behind”. What they really mean is ‘spend thousands of pounds training with us making us rich at your expense’ or paying them thousands for the ‘secrets’ of property investment which get you ‘below market value’. It’s all a load of rubbish – so don’t be fooled!
Property price growth and access to cheap finance is a good for buy to let – but it can also cause the disastrous credit crunch and bankrupt investors.
So, if you are buying this year (and yes I am planning to), do so because:-
Use sold property prices from 2009 so you know what your property value could fall to and the risk you take.
The downside is the lack of stock available. This means bargains are unlikely – so building in capital growth from the start will only come through major renovation projects. If you buy at ‘market price’ and then keep your fingers crossed prices will rise, you aren’t investing, you are merely hoping.
That’s why so many landlords went bust in 2007 – make sure that doesn’t happen to you! For free help on buying to let and letting a property, sign up to Property Checklists:-
