Buy To Let Property Investor
Leading buy to let mortgage lender announced that it would no longer lend on new-build buy-to-let properties because they were too risky'. The decision by The Mortgage Works was supposedly a strong sign that the property investment boom might be at an end but once again the lack of property supply fuels the property market.
During the past five years, it seemed like everyone was buying to let as prices rocketed. Though the wheels are off the bandwagon, experts say property is still a sound investment. But buyers must research the market and should not overstretch their borrowing. Many amateur landlords will fail if market conditions become tougher. Some inexperienced investors who might have hit problems, such as a lack of tenants, will read about price falls, get cold feet and bale out. Smart investors will still do well if they follow a few basic rules.
Investors looking to buy property this year should ensure it is in an area with a rich source of potential tenants and that they dont overstretch with the mortgage.
If you're stretched as a landlord, you'll soon get into financial difficulty if there are any void periods when tenants cannot be found.
Investors should be more careful about the type of property they buy and must be prepared to hold the asset for the long term. In a slower property market, scope for capital gain is reduced. It is important to invest for income as well as growth so you arent simply relying on the property rapidly increasing in value to make the investment viable.
Investors should keep an eye on mortgage rates both for new and existing properties, remortgaging for the best deals. There are some aggressively priced loans as lenders scramble for market share.
Landlords can avoid problems by budgeting for void periods, being careful about location and type of property and ensuring that the rent more than covers mortgage and running costs.
For those wanting exposure without the hassle of dealing with tenants, a property investment fund might fit the bill.
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