I want a Buy to Let Property: Where do I start?

Buying, Landlords

Low interest rates are a great thing if you are obtaining a mortgage or already owe money, but what about if you have been saving it, or you have fallen into some money recently?

If your money is sitting comfortably in the bank then you are only earning about 1.5% and it is not really working for you. On £100,000 you are only getting about £1,500 per year. This is not much to scream and shout about, your money could be working for you much better.

The buy to let market being the nation’s favorite option, the property market is what the UK glues it’s eyes and ears to only a daily basis. Everyone is a property investor and with such TV shows as “Homes under the hammer” everybody becomes a property developer. But it doesn’t always go to plan if you don’t quite know what you are doing.

So, rather than talk about the pitfalls, I am going to offer you some expert advice as the Director of Keystones Property in Loughton on where you should be putting your money in the local area and what to look for as a safe investment.

I have always believed in Bricks and Mortar as a tangible asset, something you can touch and hold. Should a recession happen, it still holds some sort of value rather than a more volatile investment such as the stock market (an artificial currency in my opinion). Property is always a safe bet. Especially in the UK where I have invested personally and won along with many other investors. I have also sold property in the overseas market which I know quite a bit about and one thing the UK does have is the infrastructure and history of a robust property market even if there is a “downturn or a dip.”

What do I look for?

Location, Location, Location – The property market has had success starting with Central London and moving outwards. Basically anywhere with access to the city (where most people work) will always be a sure fire bet. Try to keep it within 0.6 Miles from the Station. Most tenants work in town and need the access.

Bedroom Sizes – At least two doubles please, it is not essential but give yourself a chance here. People like double bedrooms. So obviously if you are buying a Two or Three Bedroom then this would apply.

Clean and Hygienic – The Bathroom and Kitchen are key here because they are expensive parts of the property. They don’t have to be brand new, but make sure they have been looked after and check as best you can for leaks and potential problems. The best tenants expect the best, if you wouldn’t wash or cook in there yourself then why would your tenant, and if they would then it is probably the wrong type of tenant.

Yields – To work out the yield you would need to divide the yearly rent by the purchase price and x100.

E.g. £1000 Per Month x 12 (Months) = £12,000. £12,000 divided by £200,000 (Purchase Price) x100 = 6% Yield

Work out your investment on a worst case scenario, if you had to rent it quickly, what would be the lowest rent be? Work your figures on this, look at Rightmove and see for yourself what is on the market and what has been let similar. Always call around. Call a few Letting Agents in Loughton to see what you can achieve on your investment. If you are taking out a mortgage, work your figures on this. If you can profit on your investment by at least £100 per month with a mortgage then it is generally a decent deal, you might need some money in the bank for maintenance to the property.

Capital Growth – Choose an area with some access into London. London is where the money is and as long as your tenants have access into the city then your investment should be a safe bet. Desirability on a rental will generally go in tandem with a sale.

What area should I invest in?

This is a matter of opinion plus it depends what you are looking for and how much money you have to play with.

If you are looking at high rental yields then areas such as Dagenham, Barking, Chadwell Heath are good investments with access into the city, especially with the Cross Rail coming into effect. One of our investors bought a Three Bedroom House in Dagenham for £225,000 and we found him some great tenants paying £1,300 Per Month making him a yield of 6.93% – a great yield!

If you are looking for solid capital appreciation, then areas such as Loughton, Buckhurst Hill, Debden, Hainault will increase and hold their value better. If your property in Buckhurst Hill doubles in value vs your property in Dagenham, then you will earn more on the growth side of things, but on the flip side your property in Buckhurst Hill might not make you as much of a yield.

If you are looking for an investment property then give us a call as we may have something for you, we also manage properties for our landlords and we do help them with their next investment. If you do want advice or just a second opinion, then there is no harm in giving one of us a call.

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    13 Clockhouse Lane, Collier Row, Romford, Essex, RM5 3PH, United Kingdom
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