SHARE
Buy-to-Let Investment

With the rent market as hot as it is, it’s no wonder that so many investors are looking to get into the buy-to-let market. The benefits, after all, are two-fold. Not only do you invest in a solid asset that can be sold on if and when you need it, but you also benefit from rental income.

The best part, of course, is that as time goes on, your mortgage will eventually be paid off, meaning your rental income (otherwise known as rental yield) will only increase as time goes on.

While the upfront costs can be high, and you will need to have a solid backup fund for last-second repairs and other outgoing costs, owning a rental property is a great way to establish passive wealth, especially if you choose one of the UK’s top destinations, like Bristol.

Not every property is going to provide the same yield, however, and more to the point, some properties are just money pits. To help you avoid the most common cost-guzzlers and boost your rental yield further, look no further than this guide:

Start with Location

Location is your number one priority, no matter where you buy. Properties that are convenient to public transport are going to be hot on the rental market, for example. This is particularly true in cities like Bristol, where many still work in London and therefore need easy access to Bristol Temple Meads station. Alternatively, choose a popular or up-and-coming neighbourhood.

Be On the Lookout for Potential

It’s a smart idea to go into every property with the eye of a renovator. Properties that are 100% ready to move into come at a far higher price point. By choosing instead to go into the buy-to-let process with a renovation budget at your side, you can be significantly more creative in which properties you invest in, and also your overall finances.

After all, if you buy a fixer-upper, then fix it up, you’ll immediately increase the property value and, in turn, the loan-to-value (LTV) of your property, which you can use to negotiate more favourable rates when your mortgage lease comes up. As a bonus, every update you make has the potential to increase rental yield.

What Kind of Improvements Should You Consider Making?

It’s so important that you know how to increase rental yield from the outset when it comes to selecting your buy-to-let property. These updates are going to make your property more attractive, more useful, and ultimately help you fetch reputable and responsible tenants.

·       Improve the Essentials

Work to remove areas of damp and other structural issues that are unfortunately all too common in British homes, particularly in older properties that have been adapted through the decades. This is the easiest way to protect the value of your property on the whole, and is essential for insuring your business. It’s also going to become critical as the new Renter’s Rights laws come into play, particularly in regards to the updates to the Decent Homes Standard and Awaab’s law.

That being said, fixing these issues can cause an investment to become a money pit. Always invest in a full inspection so you have a clear understanding of the requirements going in.

·       Smart Storage

Unless the property you’re looking to buy to rent out is particularly large, you’ll want to invest in some custom storage solutions. This is particularly important for one-bed or even studio properties, as the ability to store a person’s belongings becomes critical, and smart storage allows your renters to do so without compromising on their living space.

Consider Comparative Rents

Before going all in on a bid, it’s important to consider the rental market from a numbers point of view. Consider what comparative rents are going for currently in the area for a property similar to the one you are looking at (upgrades included). If the mortgage, insurance, and savings (for repairs) you’d need for the property per month are higher than the average rental unit, then you may want to pass on it and look elsewhere.

Create a Shortlist of Professionals

Unless you live nearby, you’ll likely need a team of professionals to handle every element of the rental unit. Create a shortlist of property management companies, contractors, and even repair services so you can get a good understanding of what the current outgoing rates should be in that area, as this will factor into your rental yield and help you pick the best rental unit for your portfolio.

Luke Johnson