Anyone can become a property investor in this day and age, but it is still vital that before you go and invest in property that you first equip yourself with the tools and the strategies to make buy to let investment a worthwhile profitable asset.
One mistake many accidental landlords made during 2009 was believing that buying a property and finding a tenant was enough to make consistent cash backs month on month. Unfortunately property investment isn’t that simple…
To make real, sizable positive cash flows of £500+ a month, you need to have a firm grasp of how the property market works, what it entails and what insights you need to make it happen.
Below we will explain exactly how you can acquire this knowledge and end 2010 with a profitable property portfolio.
What Is Buy To Let Investment?
There are many misconceptions about the property market, the first being the type of properties you can invest in. Residential, commercial, land, holiday lettings, development… each of these property routes can each provide you with a decent monthly cash flow if you invest.
The second and biggest misconception is how you invest in these properties.
In the past property investment was considered to consist of solely of the buying, renovating and selling of property which during the property boom of 2007 proved to be highly profitable. Yet the easiest and surest way to make money from property – no matter the economic climate is buy to let.
In its simplest terms, buy to let investment involves: ‘buying property with the intention of letting it out to a tenant.’ Simple, straight forward and if done right will incur limited renovation costs.
Creating A Property Portfolio
The key to becoming a successful property investor is to ensure that you keep to following key points. Follow these and you can be sure of a profitable year:
* Research – using property portals, letting agents and newspapers take the time to research where are the best rental yields, tenancy demands and buy to let mortgage deals before constructing a list of 100 properties.
* Does The Property Produce A Positive Cash Flow – the phrase ‘positive cash flow’ is determined by the size of the profits your make after your properties mortgage payments have been deducted.
To calculate this profit, simply enter your mortgage term, loan amount and interest rate into a mortgage repayment calculator, and taking its calculated interest rate payments deduct this figure from your properties predicted rental yields. Should any of the properties from your list produce a positive cash flow of less than £300 a month, remove it.
* Is There A Tenancy Demand – the incredible thing about buy to let investment is the fact that your tenant’s rental yields will be covering the entire cost of your mortgage payments. However, should your property remain empty for a prolonged period of time and it will be YOU who is footing the bill. For this reason, it is important that you first ensure that your property has got a strong tenancy demand, before you invest. If they haven’t remove them from the list.
* BTL Deals – at this point in your journey, seeking out the help of a broker can not only help you to negotiate further discounts of 10%- 30% off the property price (essentially covering the cost of your deposit), but can also ensure that you only receive access to the best buy to let mortgage deals. 85% LTV B-2-L Mortgage, 100% LTP Bridging Mortgage… all of them.
* Assured Short Hold Tenancy Agreement – it is important when constructing a tenancy agreement that all your rights are protected. For this reason, investing in a solicitor may be a worthwhile investment as they will be able to ensure that your tenancy agreement does not contain any clauses which will prevent you raising rents or ending a tenancy before an expected date.
In The Future
Making the decision to invest in property is only the first step. To ensure you achieve a profitable 2010, it is important that you invest in multiple properties and build a credible property portfolio.
If you have got cash spare to invest in property, then building a property portfolio quickly and efficiently will be easy. However, if you haven’t got the cash to raise a deposit, then there are other techniques you can use to initially make your mark on the property ladder.
By attending a property course for example, you can gain the tools, the strategies and the technique to effectively use No Deposit Down, No Money Down or All Money Back and invest in property without putting down a single penny.