Is it boom time again for buyers?
Posted by Annie Davis on 06 Jun 2013
Have you ever considered buying property to then rent it out? Becoming a landlord is a great way to earn some income. However, in the recent past, it hasn’t really been worth buying property to then let. Are we getting to a point in our economy where it is now worth the time, energy, and money to invest in real estate for let property?
Low Interest Rates
Because of the Funding for Lending Scheme offered by the Bank of England, interest rates have dropped for home buyers. This means that if you are able to put a decent deposit down on a property, you can get a two-year fixed interest rate that is significantly lower than it was even a few months ago. These lower interest rates mean that your mortgage payments are going to be lower. With low-interest rates, more people are willing and able to take on mortgages for rental properties.
Housing Prices Will Start Going Up
Soon you will start seeing housing prices go up. This means that if you are interested in getting into the purchase for letting business, now is the time to do it. You can get properties at good prices still. Eventually, the prices may go above where you are willing to purchase. However, once you have a property, you hope the value will soar at an unrealistic rate. When housing prices rise, more people are going to start letting, meaning that you will have a great market. You will want to consider working with a London letting agent.
Even Great Neighborhoods Have Amazing Prices
You can find homes with amazing prices everywhere. In neighborhoods that you may not have felt like you could move into in the past currently have homes for prices that are probably more in your price range. Because of this, you can offer a better selection of properties for let. If you are considering getting into the buy for let market, there are a few ways you can do this.
- Purchase in low-priced neighborhoods only. These homes are generally low-priced, and right now they are going for significantly less.
- Purchase in normally high-priced neighborhoods only. Here, you will find beautiful homes and great schools. Usually the homes in these neighborhoods are extremely expensive, but because of the bad housing market over the last few years, the prices may be more in your price range.
- Purchase a varied portfolio of homes. When you do this, you are giving yourself a buffer of a wide variety of letters. This is generally thought of as the best option, simply because diversity is always a good idea when it comes to investment.
More People are Moving
As the market becomes more stable, more people are willing and able to move. In many cases, this means that they will be looking to let. If you have ever considered getting into this market, now is the time to do it. As more people consider letting again, and moving in general, your portfolio will be able to grow. This will help you achieve a better income from your letting.
More Lending is Available
The banks are lending more. This is a great thing for anyone who wants to get into the game. Recently, it was very difficult to get a loan unless you had a very large down payment and extremely good credit. You may have felt like this meant you were unable to purchase any property. However, because of the incentives offered by the Bank of England, more lenders are giving money to those with less than perfect credit, and those with smaller down payments. If you have some money saved up, this means you will likely be able to make the investment you want.
Rental Prices Rising
Because the price of purchasing a home is going up, letting prices are also going up. Because of this, you will likely be able to make a decent profit. This is most especially true if you purchase a property now, at a low price. You will be able to rent it out at a reasonable market price, which will likely be higher than your monthly mortgage price. Since you are likely getting into this because of the profit and investment opportunities, this is a significant reason to jump on the buy to let option now.
Depending on the type of property you purchase, you could have someone letting the property in as little as a week after you advertise. Keep in mind that this is not always the case. However, some properties have better turnaround times than others. Flats with one or two bedrooms are going to let much quicker than large homes with high rents. Understanding the property you plan to invest in can help you make the right choice for you.
Remember, there are two sides to every coin. Though now is a good time to purchase to let, there are also potential problems that you will want to consider before investing.
- There is the possibility that you will not get tenants quickly. This will leave you with the mortgage.
- The market looks like it is going up, but it is not completely stable. It is possible that it could fall again.
- Unless you are working with a partner or a letting agent, you may find yourself overwhelmed. This is most likely if you are a first time landlord.
- You still need to come up with a deposit or collateral for the properties you plan to purchase. Unless you already have money saved, this can be a long process.
If any of the above happens, and you default on your loan it could severely impact your future purchasing options. This could hurt your business, as well as purchasing a home for yourself and your family.
Right now is a great time to purchase to let. Know what type of properties you are interested in, and make suet hat you are working with others who can help you. Avoid the pitfalls, and you will find that being a landlord is a great investment of your time and money.