I was speaking to a friend of mine this week who is looking to invest in some properties to let out.  He asked me for my opinion on what to look for when purchasing a Buy-to-Let property.  So I thought that I would pass on my advice to you lovely readers.

Your Return

The first and most obvious place to start is the annual return that you are going to get back from your investment.  A simple calculation dividing the projected annual rental income by the purchase price of the property and then multiplying the answer by 100 will give you a gross yield figure.

However if the property you are looking at is leasehold then you will also need to factor in any ground rent and maintenance charges in to your calculation.  The sum of these charges should be deducted from the projected annual rental income before the rest of the calculation above is carried out.

A quick look at current available stock on Rightmove tells us that the average gross yield on a two bedroom property in the SO31 area is currently 4.3%.  In Locks Heath though the average rental figure is slightly higher than the SO31 average at £900pcm meaning that the average gross yield is also higher at 5.1%.

Another thing for consideration that may have an effect on your yield, especially in the first year, is the condition of the property.  Are you going to have to do any work to get the property ready for the rental market?  Is it just decorative or are you talking new carpets or even bathrooms or kitchens?

What do Tenants want?

The next thing to look at is how in demand your property is going to be once you start offering it to the rental market.  The last thing you want is to start sweating over how easily you will find a new Tenant every time it comes up for re-let.  Currently in SO31 40% of properties listed to let on Rightmove are let agreed compared to 64% in Locks Heath.  Looking at the graph below the most popular size of property are one and two bedroom.

So what style of property do Tenants prefer?  The truth is that there are some people out there who only want a house due to their desire for outside space.  But there are also a lot of people that don’t want the ongoing maintenance of a garden so want an apartment or flat.  Whilst I always advise potential Landlords to emotionally detach themselves from their rental properties there is a lot to be said for choosing a property or even area that you would like to live yourself if you were in the Tenants’ shoes.  In a slower market curb appeal has a lot of say over whether your property fades in to the background on Tenants’ searches online and therefore whether or not to pick up the phone and come and view it.  Proximity to particular schools or bus train routes also plays a part in Tenants’ decisions so also bear this in mind.

Lastly consideration should be made to the future.  A good property should sell easily if you ever need to release some funds.  So if you are considering buying a property to let out you should buy a property that is going to be saleable.

If you are thinking of purchasing a Buy-to-Let property, whether you are an existing Landlord of mine or not feel free to give me a call on 01489 570011 or drop me a line at james.hill@brooklettings.co.uk.  I will always give you my unbiased opinion on any potential purchases.

For more articles like this visit The Locks Heath Property Blog.