How to Invest in Buy to Let

It is safe to say that property investing has stood the test of time as a fantastic source of income over the years. Acquiring property as a tangible asset is a fantastic way to leverage debt and, it’s a great way to generate monthly cash flow. There are many property investment strategies that have seen a rise in trends in recent years and although turn-key buy-to-lets can be seen as a ‘vanilla’ property investment strategy in the property world, they are still a great way to allocate money sat in the bank that is currently eroding in value due to inflation.

What is a "Turn-key" Buy to Let?

The term "Turn Key" in property lingo simply means a property that is ready to rent out from day 1 or needs minimal refurbishment to get it up to a good standard to rent. This cuts out the need for a large refurbishment fund and a long timeline in which the property will be ready for rent. This can help minimize stress as you won't need to manage a large refurbishment which makes turn-keys a great choice for a lot of individuals given that the barriers of entry are smaller.

How to fund a Buy to Let?

There are several ways investors choose to purchase a BTL investment. The first and most popular is the BTL Mortgage. Doing it this way normally includes the investor having at least 25% of the total property value as a deposit.

Pros- More liquidity to reinvest and buy more, can be used to leverage debt

- Lots of products to suit different demographics

Cons- Lower monthly cashflow in comparison to cash-only purchase

- More external fees associated with the purchase, broker fees, arrangement fee etc

The second way investors may choose to fund a Turn-key BTL is through a straight cash purchase. This way is less popular as it requires the investor to have the full purchase price of cash ready.

Pros – can be a bargaining point – cheaper discount

- Normally quicker to purchase no need for a mortgage company

- More cash flow each month

- Can refinance later on down to line to enable money to be pulled out – may be beneficial in regards to changing mortgage rates.

Cons – Money tied up

- Can take time to build a cash pot.

Due diligence

Running due diligence on a property is extremely important before purchase. This is the stage where investors need to research thoroughly to ensure the property stacks up from a numbers perspective.

This includes running due diligence on the area to understand the target demographic of your tenants, rental values, property values, that rents quick, and what doesn’t.

If you want to learn more about running enhanced due diligence visit our page on how to run enhanced due diligence on an investment property.

Buying

The buying stage of the property is also important, this can be the difference between a quick stress-free purchase that takes 4 months or a purchase that takes a year with a lot of headaches.

Your power team is one of the most important aspects of consistent investing. This includes finding and having great relationships with the professionals you surround yourself with such as mortgage brokers, solicitors and surveyors.

Renting

Find a good letting agent. Finding a good letting agent can be essential to your success in managing the property and finding good tenants. The maintenance of a property throughout the tenancy is one of the most single important factors to enable sorting out any problems if and when they arise. This will also help keep the property in good condition to save money further down the line on repairs. Plus, happy tenants will equate to more consistent cash-flow. Ensure you are researched and up to date on the rental prices in your area to ensure you are offering the right amount for the property as well as maximizing your cash-flow as much as possible. It is also important to save money in reserve to pay for maintenance as a contingency.

If you are looking for a managing agent in South Wales, Apollo offers a hassle-free quality management service for property investors - for further information please visit our property management page: https://www.apollopropertysourcing.com/property-management