Whilst investing in property can certainly be a risky endeavor, long-term buy to let properties are a representative of an investment opportunity which is potentially safe, secure, strong and rewarding if the right consideration is given. We have collected and explained some of the most important factors that you should consider when choosing a buy to let investment.
Research the Market
Whether you are looking to invest in a buy to let property at home in Australia or abroad, it’s important that you carry out some thorough market research beforehand in order to determine the kind of properties that are most in demand. Doing so will enable you to get the most out of your property investment as there will be a large number of potential tenants looking for the kind of property which you have invested in. You should also research the area where you are planning to purchase a property, as well as look into the basics of buy to let investments. You should also consider if buy to let investments are a good choice for you and whether or not it is a suitable way to invest your money.
Choose a Good Location
As with any type of investment in property, your success will largely depend on the type of location that you choose. Before making a decision, it’s wise to thoroughly research the economic, demographic and also the social situation of the area where your prospective buy to let property is located. Positive signs to look out for are an improving economy, future plans for business investments and new developments as they all signify a stable investment and appreciation. These signs also usually make for growing employment opportunities, which in turn results in a good rental market. You should also take into consideration the growth of rental yields in the area and the stability of the area’s real estate market.
Think About Tenants’ Needs
The most important factor when investing in a buy to let property is the needs of your potential tenants. After all, you are not planning to purchase the property in order to live in yourself, so you should look at properties with the needs of your tenants in mind rather than your own. Is the property that you are considering close to local amenities such as schools, shops and a hospital? How good are the public transport links in the area? You should not only think about the features offered by the property and ensure that it is in suitable condition for letting when you consider the needs of your tenant, but also consider the area as a whole and whether or not it is a place that prospective tenants would deem a good place to live.
Think About the Risks
Before making an investment in a buy to let property, you should first investigate the different potential risks that are involved. Unfortunately, no investment in property is without any sort of risks, although some are much higher than others. You should carefully consider the possible pitfalls, such as whether or not you would be able to continue your investment should house prices fall dramatically, or whether or not you would be able to afford the investment if the property was vacant for a long time in between tenants. Other risks such as major damage caused to the property by a tenant or tenants failing to make rent payments should be carefully taken into consideration before a decision is made. Weighing up all of the possible risks involved and determining how and if you will be able to deal with them should they occur will greatly increase your chances of success.
Know How to Make a Good Profit
Realistically, you should be able to expect a net yield of around 9-11% from your buy to let investment, considering that you choose wisely. The economic recession has resulted in a large number of foreclosures, meaning that below market properties are more widely available for investors than ever before. With long term rental properties, you will also need to consider the costs of refurbishment, taxes and occasional repair expenses when it comes to determining how much profit you will be able to make. Choosing an area with a good rental market will also have an impact on the profit that you make as it is less likely that the property will be left for long periods of time without tenants.