In this article we will provide you with an insight into the buy-to-let basics, from our guest writer from Why Property Works, Hazel De Kloe.
As the rest of the country is gearing up towards the festivities of Christmas and the New Year, now is the ideal time to be taking advantage of what others’ may not being doing at this time of year. Over the course of my next three articles, I will be imparting to you how best to capitalise on the buy-to-let market during the winter season. Although we now find ourselves in a relatively ‘bullish’ property market, what with regular news reports of increased house price growth and in particular London and the South East seeing the biggest surge, we must remain grounded and keep our business heads on when considering any further buy-to-let investment. Even with the media hype and the appearance that ‘the good times’ may seemingly be back, the fact remains that the vast majority of people who would like to invest in property do not
take much action. Coupled with the fact that we are well and truly into the cold snap with shorter days and the ‘hibernation factor’ in the mix, in my opinion it is always the best time of year to be searching for a ‘deal’.
You will find below some of the main points you’ll need to take into account before considering your next investment to ensure you make a good decision.
1. Your Exit Strategy
– why think about the end before you even begin?
If you haven’t set yourself particular targets, i.e. capital growth or income, how will you know you have made the right investment? Although I am talking specifically here about buy-to-let, you still have to make a decision about what purpose the property will cater for. Will it be to bolster your pension, add funds to your current income, be a mixture of pleasure and income (i.e. a holiday let) or something else? If you consider this carefully then it will have a big impact on where you will start your search.
2. Putting Together Your Team
As with any other business, you must make sure you have all your team members organised and ready to take action to help you find and purchase the perfect property. The team I am talking about here consists of an estate agent, letting agent, mortgage broker, conveyancing solicitor, builder/trades people, valuer/surveyor and tax planning accountant. If you do not have the best people you can find on your side, then finding and acquiring the right deal can be an uphill battle.
3. Due Diligence and Research
It goes to say that you must cover this angle in great detail to know where and what you are buying. My advice would be to never take someone else’s word for it, ensure that you know what you are getting into from analysis that you have done yourself. This may include collating opinions and advice from others’; however the ultimate decision always lies with you. For more on this point, please refer to the March article I wrote entitled ‘Making a Business out of Being a Landlord’ which can be requested directly from me through the website link below.
4. Location, Location, Location!
I think this says it all. As we know, based on the research you do, the success of your investment will ultimately be determined by how good the location is that you choose.
I appreciate that this is not the most glamorous subject in the world, however it is such an important aspect that I have felt to cover it here. If you have already experienced the joys of owning property, you will know that ‘property breeds paperwork’! Right from the word ‘go’ and even when collecting sets of property details, it is crucial to have some sort of comprehensive filing system to keeps matters organised. Keeping correspondence, legal forms and finance matters in one place is a good idea. Having learned the hard way, I now know how crucial it is to keep your paperwork organised so that you can find things quickly and easily.
The last (but certainly not least!) point in this initial set is the subject of raising finance. Whether you are a cash buyer or need to raise a mortgage to purchase your property, it is a good idea to make sure that you have this set up before you start looking. I will reiterate the point that I have made before that too few people really understand the financial calculations and implications of going into property investment. It must be one of your top priorities to know what ‘the numbers’ are before you begin and how everything will look once you have purchased the property. We have the luxury of property being (as far as I know) the only business in which you can accurately predict the cash flow even before you go into a deal, so there really is no excuse!
There is certainly much to take into consideration when investing in property. When I first started out, I wish I'd had more pointers to set me off in the right direction. The benefit of a working with a good property mentor
is invaluable and is the main reason why I set up my mentoring business in the first place. Helping to 'springboard' someone's knowledge, experience and results is incredibly rewarding to me, and if I can help as many people as possible to 'get it right' along the way, then I am serving my purpose.
I look forward to imparting more pointers in due course which will include aspects of buy-to-let – the acquisition and the business end.
For further help or guidance, please feel free to contact me directly and I’ll be happy to help.
Wishing you a wonderfully fun and relaxing Christmas and New Year!
Hazel de Kloe – Why Property Works
For more information on buy-to-let, look to our recent articles on http://www.martinco.com/news/