If you’re thinking of buying an investment property to rent, you’re not alone. Buy to let property investing is one of the most popular methods of investment in the UK, with the ability to generate two types of returns through both rental income and capital growth. Before you get started with finding a buy to let property for sale, it’s important to pay attention to the different things that can affect your investment. If you’re wondering how to buy investment property for the best chance of success, here are three quick tips that all first-time investors should know about before they start investing.
Look for the best buy to let cities
When you’re thinking of buying an investment property to rent in the UK, one of the most important and vital tips for buying your first investment is to research different areas. The UK is home to some fantastic areas to look for a buy to let property for sale, with statistics that tick the boxes when it comes to a promising property venture. The main things that every property investor needs to pay attention to in their due diligence process is rental yields, capital growth, and rental demand. These are the most crucial components of a lucrative investment, as without them you won’t be able to generate the best returns possible when buying your first rental.
As of 2019 and the most recent years, the best cities in the UK to make an investment in property are Liverpool, Manchester and Leeds. These three cities highlight the success of the North of England when it comes to UK investments, turning the attention away from London and the South. Manchester boasts average rental yields of 5.55 %, Liverpool 5.05 %, and Leeds 4.29 %. In certain postcodes like Liverpool’s L1 postcode and Manchester’s M14 postcode, yields can reach over 10% for the right types of investments. Those wondering how to buy investment property and generate the highest rental returns should focus their attention on these top Northern cities, all of which are also seeing significant tenant demand for student and residential property.
In terms of capital growth, the north-west displays the best rates of house price growth of any UK region, with predictions to increase further by 2022. Regeneration is one of the main reasons behind this property market growth, with Liverpool, Leeds and Manchester all hosting significant regeneration schemes that are set to increase the appeal and interest of these cities even further over the coming years.
Establish your target market
When you’ve found out more about the UK property market and the ideal locations to invest in, it’s time to consider your target market before you buy the property as this is key in knowing how to buy your first investment property successfully. Different tenants will be drawn to different rental properties. Naturally, student tenants will seek student accommodation to live in, whereas other tenant groups like young professionals and retirees would boost demand for rentals in the form of a residential house or apartment. Deciding who your ideal tenant group will be is a key element of your investment strategy, as it will determine the type of property you should look for.
So what if you’re not sure on your ideal target tenant? According to advice from landlords, the best tenants in the UK are typically students and young professional couples. Students make good tenants due to the fact that they pay their rent on time and treat their landlord with respect due to viewing them as an authority figure. Young professionals and young professional couples that rent properties tend to be more likely to keep the property in good condition which is beneficial as it cuts down on maintenance costs. Also, if one tenant was to suffer financially, the other tenant can usually temporarily cover the costs of their rent, which avoids any late payments which can impact your rental returns. If these are the type of tenants you wish to rent your buy to let property to, you should look into student properties or residential city centre apartments to ensure consistent demand.
Pay attention to market changes
No matter how stable it may be at one point in time, the property market can encounter changes. It’s important to be aware of the kind of fluctuations that can occur throughout the UK property market both before and after investing, as this will ensure you don’t face any nasty surprises if things don’t go as planned. The best way to avoid market changes negatively affecting your buy to let investment is to look at past statistics and predictions for the future, such as house price predictions and expected rental market changes. Property in the north-west region, as already mentioned, is likely to remain strong for many years to come. However, things can always change, and property prices could drop unexpectedly. If you’re worried about negative changes further down the line and want to know how to buy an investment property with minimal risk, you could create an exit strategy that focuses on selling the property at the best possible time. This way, you can be sure that you’ll make big gains on your investment as it has increased in value, and could put your money towards a new venture in the future.
Here at RW Invest, we have a range of fantastic buy to let opportunities in the UK and a track record for providing our clients with a profitable rental property. Get in touch, and we can help advise you on how to buy your first student or residential property in one of the UK’s top cities.