Barry Jess proprietor of Property Locker, reveals his top ten tips for buying investment property
Work out the finances
This should be the first step whether you’re buying in Falkirk or Dubai. Before you think about buying a home, it is imperative to have your finances in order so you know your maximum budget – and this includes mortgage arrangement fees as well as legal fees; there are a number of charges and one off fees all buyers should be aware of before any property search.
Arrange a mortgage in principal
Having a mortgage in principal set up makes you a more attractive buyer and offers more negotiating power so it’s worth setting up an agreement with a lender ahead of looking for a property. Shop around too of course; it’s rare to get the best deal from the first broker you approach. The buy-to-let market is booming just now with new lenders popping up all the time and the average deposit required is around 20 to 25%. In the first quarter of 2013, the buy-to-let market burst into life when lending to landlords reached £4.2bn across 33,500 loans, according to the Council of Mortgage Lenders (CML). By the end of March, it accounted for nearly 14% of total mortgage lending in the UK, representing a 13% increase from the last quarter of 2012.
Put the time and do your research
Buying a residential property anywhere is a significant investment so naturally it pays to do your research before buying a home. As with any investment, you need to be careful where you put your money. It’s crucial to do your research and carry out due dilligence to find the right property in the right area to maximise your return. And it must have the ‘rentability’ factor, commanding both a strong rent and, importantly, a high occupancy.
Be prepared to move fast if you have to
In the UK, residential property continues to outperform all other asset classes over whatever period you measure. House prices in the UK have a low volatility when compared to stocks and commercial property.
Buyer confidence is back – so you need to be prepared to move fast if you want the right property…especially in Scotland’s property hot spots the market is buoyant and competitive so if you see somewhere that looks perfect for you the chances are it’s perfect for someone else too. With this in mind, be ready to snap up a bargain if you see one. It’s worth setting up alerts with property sites so you can keep up to date with what’s on the market in your preferred areas.
There’s nothing wrong with taking on a project
If you’ve got the time and money, there’s nothing wrong with taking on a property that requires renovation. In fact, to maximise our clients’ investments, we always look for properties that need a makeover as this often yields a better return on investment. At Property Locker, we even manage the renovation works. If you’re able to bring a property up to a good standard you can see a significant return on your investment when you come to rent it out or sell.
Location, location, location
One of the most important things to get right as an investor is location; buying the right location is key. Being close to schools, universities, aspirational areas,strong transport links and shopping should all be considered .
It’s also important to look at the rent-ability or re-saleability of your potential purchase to ensure it’s a sound investment.
View, view, view
If the property is to live in as opposed to let out, it is also important to visit the property (and surrounding area) a number of times at a different points in the day. Take a wander around local pubs and parks and make sure you’re comfortable with your surroundings. If you’re not happy in the local pub at three in the afternoon, chances are you’re not going to be happy living next to it for the next ten years.
Treat any viewing like an inspection
It’s crucial to buy well, without compromising on the above. Always bear in mind that you are there first and foremost to check for flaws that can come back to haunt you down the road. With that in mind, it’s a good idea to scrutinise the survey carried out and use the professionals to inspect any issues / draw up plans. It pays in the long run to have all due diligence carried out up front.
Be flexible with your offer
In the current market you can afford to go in low, but not too low. Give yourself a bit of room for manoeuvre with regards to your offer, be prepared to give a bit more but don’t be afraid to chance your arm and get a bargain either.
Ask for the property to be taken off the market
Once you’ve agreed a sale, ask for the property to be taken off the market. This will reduce the chance of another bidder coming in higher than you once your offer has been accepted. That said, there are no guarantees untill all missives are concluded.
