What should you really look for in a property deal? We go through the fundamentals...
Buying a home with the intention of letting it out is a completely different beast to buying one to live in. It will require careful consideration to ensure you get the best rental income and a profitable return.
If you choose well, you’re going to benefit from short and long-term gain. In the short term, you’ll be receiving rental income each month from your tenant. Once you’ve covered your outgoings, the rest is yours to invest, save or spend. And in the long term, you’ll benefit from the capital gain that your property generates.
When assessing your property investment options, you’ll want to look out for some key things. We’re here to tell you specifically what to look for and why it’s so important.
Return on the investment
The rental yield is a measure of the return you could make from a buy-to-let by comparing the rental income against the value of the property. As a rough yardstick, if the property is likely to generate a yield of 5% or higher, it’s a good bet for buy-to-let. Of course, it's worth noting that the rental yield differs from region to region - you're best speaking to a local agent to get a good idea of yields in your area. Demand for rental property is an important factor in determining possible rental income. If there’s not a high rental demand in a particular area, you may want to consider if you should invest there. An easy way to find this information out would be to speak to your local letting agents. They’ll have a good idea of what the rental demand is like in the area you’re looking in. Rental demand can significantly differ from neighbourhood to neighbourhood, even from street to street. But getting in touch with the local experts would be the first obvious tip.
If you’d like to check the likely rental income on a property you’re interested in, get a free, no obligation valuation now.