2011 looks set to be another strong year for buy to let property investment in the UK. Clever investors are taking advantage of the bottom of the property cycle by snapping up heavily discounted stock from bank repossessions, liquidators, distressed sellers, developers experiencing difficulty and receivers. Indeed, today's market offers rich pickings for buy to let property investment.
Before we look at the key principles of profitable buy to let property investment, I would like to share some figures with you. Did you know that banks can charge 80% or even 85% in fees on your pension savings and only offer a 32% return on traditional savings over a ten year timescale. Compare this to buy to let property investment which gives you a 300% to 400% return on investment over that same time.
The current record-high rents in the UK also herald positive cashflow for buy to let investors, with reports that landlords are seeing 10% rent rises across their whole portfolios - in just one month. CEO of the Upad Landlord Confidence Index, James Davis, comments: "This is the highest we have seen landlord confidence since January last year. Lack of supply of rental property is pushing up rents in many areas and landlords need to expand their portfolios to meet increased demand."
So far so good, but it is important to remember that your own idea of an ideal home should not be the deciding factor for your buy to let property investment. Rather, the best buy to let property investments should match your target rental audience. Bearing this in mind, let's move on to the five key principles of buy to let.
Purchasing your buy to let investment property below market value is the first key principle. This creates instant equity from the start, before your positive cashflow and capital growth. For example, a 150,000 market value property at a typical 15% to 30% below market value discount would give you between 22,500 and 45,000 instant equity.
With rents higher than ever, an excellent rental income is easier than ever to achieve. Good news, as this is the second principle of buy to let property investment. Whereas property investor landlords used to be lucky to get a 5% rental yield, typical yields are now between 6% and 9%.
Leverage, using other people's money to finance a large percentage of your buy to let property investment, is the third key principle. For example, if you purchased a 150,000 market value property at a 30% below market value and obtained 75% loan to value leverage, you would only need 26,250 of your own capital. Leverage is an excellent option for property investors with limited liquid cash.
Due diligence is the fourth and, perhaps, the most essential of the key principles of buy to let property investment. Investor clients of Axis Property Investment gain the benefit of our extensive 123 point due diligence checklist, but we always recommend you complete some of your own research as well. If knowledge is power then a well thought out portfolio is a powerfully-performing portfolio.
The fifth key principle of buy to let property investment is to ensure you receive the maximum results, in the shortest time, with the minimum input on your part. Of course, the easiest way to grow your buy to let property investment portfolio is to work with a company which does all the hard work for you. All Axis Property Investment deals come fully-packaged and managed, with end-to-end support and advice.
So, the first key principle of buy to let property investment is to buy below market value and gain instant equity from the start. The second principle is to ensure you receive positive cashflow from rental income. The third principle, leverage, can help you finance the deal if you don't have much of your own capital to invest.
If you choose to work with a company such as Axis Property Investment, then the principles of due diligence and fully-managed 'armchair' deals are easily handled for you. More buy to let landlords than ever are turning to companies like Axis Property Investment, as this provides the easiest and fastest way to grow your portfolio. If you are going solo, though, ensure you follow the five key principles of buy to let property investment and you shouldn't go far wrong.
Before we look at the key principles of profitable buy to let property investment, I would like to share some figures with you. Did you know that banks can charge 80% or even 85% in fees on your pension savings and only offer a 32% return on traditional savings over a ten year timescale. Compare this to buy to let property investment which gives you a 300% to 400% return on investment over that same time.
The current record-high rents in the UK also herald positive cashflow for buy to let investors, with reports that landlords are seeing 10% rent rises across their whole portfolios - in just one month. CEO of the Upad Landlord Confidence Index, James Davis, comments: "This is the highest we have seen landlord confidence since January last year. Lack of supply of rental property is pushing up rents in many areas and landlords need to expand their portfolios to meet increased demand."
So far so good, but it is important to remember that your own idea of an ideal home should not be the deciding factor for your buy to let property investment. Rather, the best buy to let property investments should match your target rental audience. Bearing this in mind, let's move on to the five key principles of buy to let.
Purchasing your buy to let investment property below market value is the first key principle. This creates instant equity from the start, before your positive cashflow and capital growth. For example, a 150,000 market value property at a typical 15% to 30% below market value discount would give you between 22,500 and 45,000 instant equity.
With rents higher than ever, an excellent rental income is easier than ever to achieve. Good news, as this is the second principle of buy to let property investment. Whereas property investor landlords used to be lucky to get a 5% rental yield, typical yields are now between 6% and 9%.
Leverage, using other people's money to finance a large percentage of your buy to let property investment, is the third key principle. For example, if you purchased a 150,000 market value property at a 30% below market value and obtained 75% loan to value leverage, you would only need 26,250 of your own capital. Leverage is an excellent option for property investors with limited liquid cash.
Due diligence is the fourth and, perhaps, the most essential of the key principles of buy to let property investment. Investor clients of Axis Property Investment gain the benefit of our extensive 123 point due diligence checklist, but we always recommend you complete some of your own research as well. If knowledge is power then a well thought out portfolio is a powerfully-performing portfolio.
The fifth key principle of buy to let property investment is to ensure you receive the maximum results, in the shortest time, with the minimum input on your part. Of course, the easiest way to grow your buy to let property investment portfolio is to work with a company which does all the hard work for you. All Axis Property Investment deals come fully-packaged and managed, with end-to-end support and advice.
So, the first key principle of buy to let property investment is to buy below market value and gain instant equity from the start. The second principle is to ensure you receive positive cashflow from rental income. The third principle, leverage, can help you finance the deal if you don't have much of your own capital to invest.
If you choose to work with a company such as Axis Property Investment, then the principles of due diligence and fully-managed 'armchair' deals are easily handled for you. More buy to let landlords than ever are turning to companies like Axis Property Investment, as this provides the easiest and fastest way to grow your portfolio. If you are going solo, though, ensure you follow the five key principles of buy to let property investment and you shouldn't go far wrong.
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