Buy-to-let is an area of property investment that can intimate some people so we caught up with ESPC’s lettings manager Orlaith Brogan to learn more.
Which Edinburgh postcodes/ Edinburgh locations do you think have the best buy to let returns?
Many factors impact the popularity on an area for buy-to-let investors. We tend to find that many investors are looking for a balance between a good rental yield, capital growth and ease of letting.
The amount you can afford to spend will usually determine the area you will purchase in. As a rule of thumb, think central! When choosing a property in a certain area, always highlight the benefits of living in such an area and what it can offer its residents.
Edinburgh is a beautiful city with a strong rental market and some useful tips on what areas are popular with which tenants can be found in the table below.
|New town / Stockbridge||Very popular with professionals and families.|
|Broughton / Bellevue||Professionals|
|Newington / Marchmont / Viewforth / Causewayside / Polwarth/ Tollcross||These areas have a large student market due to the ease of access to the local university campuses|
|Bruntsfield / Morningside/ Merchiston||Families|
|Dalry / Haymarket/Roseneath||Professionals|
|Liberton / Gilmerton / Fairmilehead/ Colinton / Slteford/ Baberton / Currie / Balerno||Great family areas.|
What should a buyer look for in a buy to let property if they are just starting out?
When you have decided on an area and are looking to choose a property in that area, always consider (look for these at viewings):
- Condition of exterior
- Condition of décor and fixtures: Is the property in good decorative order. If not, best to budget for this in advance.
- What will cost you money over time? This usually includes the age of the boiler. Has it been well maintained? The age and condition of kitchen and bathroom? Also consider communal factors such as condition of the roof and stairwell.
- Items included in the sale – always check the items you will inherit with the property such as the heating system, windows, white goods, seals etc and make sure they are in good order.
What are some tips for growing your buy to let portfolio?
We deal with a large number of buy-to-let investors. Many are looking to grow their portfolio over time and we always advise them to:
- Start with one good investment.
Investors usually spend longer on their first investment than any other. They should ask as many questions as possible. Ensure you are comfortable with the property, its location and its condition. It doesn’t have to be somewhere you would like to live but you should ensure that it is a good investment property.
- Get the right team behind you!
In order to become a successful investor you will need support and specialist knowledge. We recommend the following:
Solicitor: To ensure that the purchase process runs smoothly and that you stay within budget for purchase.
Financial adviser to help you get the best financing deal.
Tax adviser: They can help you pay the right tax for you.
Letting agent, property professional: Someone who can help manage the property and offer pre purchase advice on the rentability of your investment properties.
- Know your market and delight your tenant
Investors should know what type of tenant wants to rent in which area and how to stand out from the competition. The best way to do this is to present a property that will attract the best tenant at the best possible rent. Happy tenants stay longer.
Which property types are better for buy-to-let properties – traditional tenement or modern properties?
Both traditional tenement and modern build properties are popular with renters and there is very much a market for both. From an investor’s perspective you should consider what you would prefer. Modern developments are often easier to maintain but have factoring charges and traditionally experience slower capital growth. More traditional properties come in all different shapes and sizes and are located throughout the city. They usually grow in value that bit faster than more modern builds but do not have factors to help manage any communal issues.
How do you think the new tax changes in April 2016 will affect the buy-to-let market?
Alone the new changes in legislation would be an added financial burden that investors must endure. However if you combine this with the increased safety measures in place and the new housing bill – there is much more for an investor to consider other than ‘will this property let out’.
Investment still remains an attractive investment option and there is a strong demand for rental properties with many tenants happy to rent in the long term. Investors should carry out thorough research and proper budgeting before deciding whether or not to invest.
What are your top tips for buy to let investments?
- Know your reason why! Investors should know what they want from the investment process and follow the necessary steps to ensure this result.
- Ask all the questions that come to mind – when it comes to investing a large amount of money there is no such thing as a silly question and now is the time to ask them.
- If you are new to buy-to-let and you do not know the market you should research the local market and fully identify the risks as well as benefits.
- Choose a great area. Great does not mean the cheapest or most expensive area but rather one that is central and is popular with renters. Tools such as Street View means that investors can assess the area.
- Budget! Before you even view a property, sit down and write down all costs related to the property purchase and preparing it for rental. You should also consider the rental return you need to cover your mortgage and all ongoing expenses such as repairs and agency fees etc.
- Get the best mortgage – this is not necessarily through your bank as it often pays to speak to a good independent broker when looking for a buy-to-let mortgage.
- Look at the property through the eyes of the tenant – Rather than consider whether you like the property or not, consider what your target market are looking for and present the property to their taste.