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Property Hawk

Finding BTL Property

For those investors looking at buying or expanding their residential portfolio in the New Year here are 10 tips to sourcing a buy-to-let bargain.

1. Targeting an area


The first essential thing a landlord needs to do is to be selective on their area of search.  There is a lot of property out there. The essential thing is to narrow your area of search to a part of town or even a few streets, otherwise you’ll be constantly chasing your property investing tail for little result.  One of the best ways to do this is by employing one of the new features on Rightmove.  This allows you to define and then draw an area of search.  By putting a line around the part of town you want to buy in you can monitor properties and prices and look to strike when the price is right. Key is research and fully understnading the nuances of the market you are investing in.



2. Identifying the right properties


Part of successful investing is being able to source the right properties for the type of tenant you want to let to.  A good way of accessing the types of tenants you can expect from any property is assessing the types of people that already live in the area.  Are they the types of tenant you want?  Landlords can use social economic databases such as ACORN available through Upmystreet to dig a little deeper and get a feel for the area behind the front doors.

A successful property investor can identify properties that are going to rent well and achieve good rents whilst still being amongst the cheaper properties.  Thereby maximising your gross rental yields.
Remember that identifying the right property is as much about understanding what makes a space attractive to tenants.  One of the best books I’ve ever read at explaining the emotional connections that we have with space and property is Michael Pollan ‘ A place of my own’.

If you know somebody who is interested in property investment, it would make a great Christmas present.

Get BTL Mortgage Advice - TEL 029 2069 5446

3. Do your figures stack up?


It’s essential that you do your figures.  Do you know what your gross rent is likely to be?  More importantly what about your net rent.  Don’t get caught out by expensive service charges.

Have you allowed for a voids period and other charges? I maintain that in the current climate property investors should be aiming for a net yield of around 8%.  In London it may be  a percent or two less to allow for the better capital growth prospects.

5. Get a profile


Landlords who want to get offered the best buy-to-let deals need to develop a profile with local estate agents.  Being a buy-to-let landlord may seem like a fairly anonymous activity, but like any business it’s all about getting your name out there.  Speak to estate agents and give them your requirements.  That way you will tend to have first sight of the new properties as they come on the market giving you the best shot at picking up the bargains.

It’s essential that you get across the fact that you are keen to buy and that you are well financed.  That means either that you are a cash purchaser or have ready access to mortgage finance.  What estate agents want is a buyer with ready access to funds and who can deliver on quick straight forward transaction.

6. Access to finance


In the current climate, cash purchasers are a very attractive proposition indeed, if not cash landlords need to be secure that their mortgage broker can secure them access to funds quickly. Work at identifying a BTL mortgage broker that you are happy with and know will deliver.

7. Talk to the owners


Establishing a relationship with the owners of the property could help with the deal. Having met you, the vendors hopefully think that you are a good trustworthy person to deal with. You should then be half way there in terms of convincing them to sell to you.  I’ve recently viewed a property which the vendor conducted the viewing which was great because I could tease some important details out from her about her aspirations for the sale.  It appeared that she was looking for a house but wanted to sell first to put herself in a good position when it came to a purchase.  I immediately offered her the opportunity to rent back the flat whilst she searched for a house of her own.  This aspect of my offer immediately made it more attractive to her over an owner occupier or other buy-to-let investor.  A landlord needs to be responsive to secure the best deals and opportunities.



 8.  Auctions can offer opportunities


Property auctions can provide a landlord an opportunity to bag a bargain.  Essentially, a landlord will need to be able to complete the purchase within 4 weeks from the gavel going down.  This makes the use of a traditional mortgage problematic as for many purchases it will take the purchase outside this time frame.  A landlord really needs cash or bridging finance to allow them to complete a purchase at auction.

The types of property that typically turn up at auction are generally: ‘wreckers’, repossessions or property that no one wants.  The proverbial bottom of the property pile. Therefore, a landlord needs to balance the attractions of a low price, against the potential resale value when it comes to realising their investment.  You should also be aware that the so called ‘guide price’ that auctioneers often attach to an auction property are often priced deliberately on the low side to draw buyers in.  Don’t be surprised if the property achieves a much higher price, especially if half decent.

9. Conversion opportunities


During the property boom many properties in non residential use were snapped up by developers and investors who avidly went about their conversion projects.  The down turn in prices and lack of finance mean that there are many properties that have come to the market and hang around unloved and unsold.  Legislation brought in by the previous government allows landlord / developers to recover most of the vat paid on bringing the building up to a residential standard.

I’ve witnessed former pubs that have gone into the auction room to be sold at less than the value of the land and salvage if you knocked them down.  Many of the least wanted buildings turn up at auctions or on specialist business agents like Christies.

10. Persistence


The essential thing for any property investor is that they keep looking and looking hard.  Finding potential investment opportunities is the fun bit.  The thrill of spotting that one in the million property that all the others have missed can’t be beaten.  Property investment bargains are out there.  However, sometimes when a property hasn’t sold; there is a reason; legal, ownership or otherwise.  Don’t get disheartened.  The path to bagging your buy-to-let bargain may sometimes be paved with disappointment,  but it can also be paved with opportunity.

Get BTL Mortgage Advice - TEL 029 2069 5446



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