Five tips for successfully investing in London’s buy-to-let market
Tips suggested by successful landlords owning several properties in London
Choose the right location
There are so many great areas to invest in a buy to let property in London. If you want to manage the property yourself, and not to use an estate agent you should choose an area that is not too far away from your home. It should not take more than one hour to commute to the flat or the house you are renting out. This is because renting out your home privately takes time. You will have to go to your buy-to-let home for viewings, to collect the rent money, and in case the tenant has an issue. Also keep in mind that houses are more difficult to manage than flats. This is because many flats in London are in buildings that offer a concierge service. The concierge could be useful for helping out with minor issues your tenant might have.
There are so many great areas to invest in a buy to let property in London. If you want to manage the property yourself, and not to use an estate agent you should choose an area that is not too far away from your home. It should not take more than one hour to commute to the flat or the house you are renting out. This is because renting out your home privately takes time. You will have to go to your buy-to-let home for viewings, to collect the rent money, and in case the tenant has an issue. Also keep in mind that houses are more difficult to manage than flats. This is because many flats in London are in buildings that offer a concierge service. The concierge could be useful for helping out with minor issues your tenant might have.
Don't buy a house just because you think it is the ideal home for you to live in.
It can happen that your trusted estate agent shows you a property for your buy-to-let portfolio in London, and you fall in love with it. This is not a good reason to make an offer on the property. Instead you should think about your target tenant. Is the area where you want to invest near a university? If this is the case you should think about buying a property with more than 3 bedrooms and move in the flatshare rental. Is it near a business district, such as the City, or Canary Wharf? In this case your target are young professionals, likely to be single. The ideal property for this type of tenant is a modern and stylish two bedrooms flat. Young professionals are often happy to share a flat with a friend or to 'buddy ups' with another person who shares similar interests. They would probably not consider sharing a house with more than 2 other flatmates.
It can happen that your trusted estate agent shows you a property for your buy-to-let portfolio in London, and you fall in love with it. This is not a good reason to make an offer on the property. Instead you should think about your target tenant. Is the area where you want to invest near a university? If this is the case you should think about buying a property with more than 3 bedrooms and move in the flatshare rental. Is it near a business district, such as the City, or Canary Wharf? In this case your target are young professionals, likely to be single. The ideal property for this type of tenant is a modern and stylish two bedrooms flat. Young professionals are often happy to share a flat with a friend or to 'buddy ups' with another person who shares similar interests. They would probably not consider sharing a house with more than 2 other flatmates.
Avoid London luxury properties
It is true London is one of the richest cities in the world. Many banks and big corporations are based in the City of London, and in Canary Wharf, however the highest demand is for rental properties which do not cost more than 2000 £ per month. In addition luxury properties are more expensive to maintain. Consider the cost to maintain a swimming pool, or a large garden. For example if you own one luxury flat in Mayfair you will probably have to pay a very high service charge. Most likely higher than the service charge you would have to pay for two or three average flats in Stratford. Properties with a monthly rent below 2000 £ are also easier to rent out. Flats, and houses that are always rented out have a higher rental yield. Successful buy-to-let landlords focus on these type of properties.
It is true London is one of the richest cities in the world. Many banks and big corporations are based in the City of London, and in Canary Wharf, however the highest demand is for rental properties which do not cost more than 2000 £ per month. In addition luxury properties are more expensive to maintain. Consider the cost to maintain a swimming pool, or a large garden. For example if you own one luxury flat in Mayfair you will probably have to pay a very high service charge. Most likely higher than the service charge you would have to pay for two or three average flats in Stratford. Properties with a monthly rent below 2000 £ are also easier to rent out. Flats, and houses that are always rented out have a higher rental yield. Successful buy-to-let landlords focus on these type of properties.
Do the maths on buy-to-let
Before getting in contact with estate agents and viewing properties you intend to buy, sit down in front of your computer and write down the cost of houses you are looking at and the rent you are likely to get. Buy-to-let lenders typically want rent to cover 125 percent of the mortgage repayments (often now 150 per cent) and most now demand 25 per cent deposits, or even larger, for rates considerably above residential mortgage deals. The best rate buy-to-let mortgages also come with large arrangement fees. Once you have the mortgage rate and likely rent sorted then you must be clinical in deciding whether your investment works out. Don't forget to factor in maintenance costs. What will happen if the property sits empty for a month or two? These are all things to consider. Make sure you know how much the mortgage repayments will be and if it is a tracker allow for rates to rise
Before getting in contact with estate agents and viewing properties you intend to buy, sit down in front of your computer and write down the cost of houses you are looking at and the rent you are likely to get. Buy-to-let lenders typically want rent to cover 125 percent of the mortgage repayments (often now 150 per cent) and most now demand 25 per cent deposits, or even larger, for rates considerably above residential mortgage deals. The best rate buy-to-let mortgages also come with large arrangement fees. Once you have the mortgage rate and likely rent sorted then you must be clinical in deciding whether your investment works out. Don't forget to factor in maintenance costs. What will happen if the property sits empty for a month or two? These are all things to consider. Make sure you know how much the mortgage repayments will be and if it is a tracker allow for rates to rise
The successful landlord is the one with properties that are always rented out
Once you own your buy-to-let flat, one of the most important decision you have to make is deciding how much to charge for rent. Be reasonable with the rent you decide to ask. If you ask for a rent 5% or even 10% lower than the average rent for a similar property in the area, you will generate interests from a few potential tenants. If you have many people interested in renting out your buy-to-let property in London you will have the opportunity to choose the tenant you like the most. This would be the one with a steady income, and that is happy to provide you all the references you need. In addition if you ask for a reasonable rent, it is more likely your tenant will rent out your property for many years. If your London property is always rented out, in the long term you will earn more money.
Once you own your buy-to-let flat, one of the most important decision you have to make is deciding how much to charge for rent. Be reasonable with the rent you decide to ask. If you ask for a rent 5% or even 10% lower than the average rent for a similar property in the area, you will generate interests from a few potential tenants. If you have many people interested in renting out your buy-to-let property in London you will have the opportunity to choose the tenant you like the most. This would be the one with a steady income, and that is happy to provide you all the references you need. In addition if you ask for a reasonable rent, it is more likely your tenant will rent out your property for many years. If your London property is always rented out, in the long term you will earn more money.