In a recent video on YouTube, I explained how I would invest £30,000 into buy-to-let real estate in the UK. There are a lot of people that ask me about investing relatively small amounts of money in property, often assuming they don’t have enough to buy their first investment property. In reality, how much money you will need will depend on the area you choose to invest in. You don’t necessarily need to invest in the area you live in and often it is better to look further afield.
Please watch the full video (above) as it contains important information about exactly how I would invest the money. In this article, I will highlight 3 tips for investing £30,000 in property in 2022 and beyond.
1. You don’t need to live where you invest
As I mentioned earlier, a lot of people assume that they should buy an investment property where they live. Often they think that property investment is out of their reach because they live in areas where house prices are high. Even if they can afford to buy in these areas, they often find that the return on investment isn’t particularly good. Just because house prices in an area might be double that of another area, it doesn’t mean rents will be.
Furthermore, it is actually better to buy out of area as this forces you to systematise your investment. If you can’t easily go and fix problems at your property, you will ensure you have your management and power team in place. Find an area with good returns and low house prices, then go from there.
2. Check rental demand on SpareRoom
Once you have found an area with great returns, you will need to check that people want to rent there. Even if the maths works on paper, if rental demand is low you may struggle to let out your property. Therefore, it is essential to accurately assess rental demand in the area you are looking to buy in.
One way to do this is to go to the website SpareRoom and type in the area you are looking at. Instead of searching for ‘rooms for rent’ however, look at the ‘rooms wanted’ adverts. Take a look at how many people are searching for rooms and what they are willing to pay.
3. You don’t need a high income to get a buy-to-let mortgage
Sometimes people think they can’t start buying investment property because they are on a low income. This is because, when you get a residential mortgage for a property to live in, lenders care a lot about your income and credit. This is because the lender needs to know that you are going to be able to pay them back from your salary. With a buy-to-let mortgage, this is not the case.
When you are buying an investment property, the lender mainly cares about the rental value of the real estate. This is because you will be paying them back from the rent you receive from the tenant. Seek out an independent whole of market mortgage broker, and they will be able to find a loan to suit your circumstances.