In a recent video on YouTube, I talk about the basics of UK buy to let investing in 2022. There are a number of important things to consider before investing in property as well as a number of things that many people get wrong. It is essential to know what to look for, and how to look for, UK real estate.
In the video I go in depth about exactly what to look for, from EPC certificates to negotiating price. I highly recommend watching the full video, which can be found above. In this article, I will summarise the 3 main things you need to do when looking at buy to let property in the UK.
1. Find an area that works
Some people say ‘buy to let is dead’, but the reality is that it just doesn’t work very well in the area that they happen to live. Often people want to buy real estate in the area that they live in so that they can be around if anything needs to be fixed at the property. This is the wrong approach. If you are on hand to deal with problems, you are just buying yourself another job! You want to be a hands off investor.
You should find an area that gives you excellent returns, and find a good property manager to handle any issues that might come up. You will normally pay about 10% of the rent for management of a typical buy to let property and it is well worth the expense. If you have a property manager, there is no issue with buying further away from home. You should focus on returns over living nearby.
2. There is no direct correlation between house price and market rents
Just because house prices are high in a particular area, it doesn’t mean rents will be commensurately high. If one area has houses that are double the price of another area, it doesn’t mean that rents will be double. Pick an area that will give you a good return on investment, which are usually areas on the lower end of the scale.
Don’t look for the top end of the market, but don’t look at the very bottom either. While you might get an amazing return in theory in a very bad, crime ridden street, you will also have to deal with the type of tenant willing to rent in that area. Unless you specifically specialise in this sort of investment and know what you are getting into, make sure not to pick the worst streets.
3.Buy low, rent high with a property manager nearby
I go by the simple adage, ‘buy low, rent high with a property manager nearby’. This means that I buy property in areas where prices have bottomed and where the rental return remains good. I find a property manager that I can trust and therefore can leave day-to-day operations in their hands.
You can ask for recommendations from other landlords when seeking a property manager. Also, call property managers saying you are a tenant moving to the area to see what the tenant experience is like. Go for managers that answer in a few rings and who are knowledgeable and helpful.