You’ve probably seen many articles and guides talking about buy-to-let and buy-to-let investments. Whilst those buy to let guide publications can be helpful to a certain extent, some of these articles are written with a lot of extra fluff that completely misses the point of what a property investment really is to regular investors.
That is why I am here. Throughout my years of experience in the property sector, I have gathered my own philosophy on being a buy-to-let investor. Looking back to when I was just a beginner with a dream of building a property portfolio, I wish I had someone to give me candid advice. As I got experience, I began to find myself surrounded with people who would sugar-coat everything. I started to wonder if it was all worth it. I would ask myself, “Why haven’t I met my goals yet?” or “Why am I not making a profit?”
My buy to let guide is no nonsense – the only guide you need to follow. If you are starting out and overwhelmed just like I was, or you want a bit more direction because your property journey isn’t quite going to plan then my guide is for you.
What is Buy To Let Investment in a Nutshell?
Buy-to-let is the UK term used for a property that is bought and let out (rented out) to tenants rather than being used as a home by the buyer. The buy-to-let sector is the most common type of UK property investment and possibly the most challenging.
The trouble is, a lot of people like me who started with a dream underestimate the amount of work that goes into being a traditional landlord. There are always new emerging laws and regulations that make the game harder, but nevertheless you have to keep up with them and know it inside and out before you can make a decent profit. There are also procedures such as marketing the property to find tenants, dealing with tenant’s late rent, handling repairs and pushing through profit-eating void periods that first-time investors don’t take into account.
One thing that I have discovered that has helped me to overcome common obstacles is fully-managed buy-to-lets. This type of investment is one that doesn’t require landlord experience, so it is ideal for beginners in property investment.
I started off investing in buy-to-lets with a full-time job. What I didn’t realise was the amount of time it takes to manage your investment and as your portfolio grows, the time you need to sacrifice increases. I wasn’t ready to juggle a full-time job, family time and my social life just to be a landlord. In the end I did my own research and found the best alternative.
Fully-managed buy-to-let investment doesn’t require any work from the investor. The whole idea is that you are still investing your money, but instead of doing it all yourself or hiring expensive agents to do it for you, it conveniently comes in an all-in-one package. Everything from repairs and maintenance to tenants and void periods are covered by a professional management company.
Don’t Let the Buy To Let Costs Scare You
If you thought doing it all yourself would save you money, take it from me – you will lose more than you gain if you don’t know what you are doing. I learned that the hard way. I started my portfolio by taking out a second mortgage to leverage my first buy-to-let. After years of managing it myself I found it difficult to keep up with the costly expenses of a buy-to-let, many of which you can find here. https://personal.natwest.com/personal/life-moments/buy-to-let/other-costs-of-buy-to-let.html
Although you will still have to pay for the property, all the tax, ground rent and solicitors fees, choosing the fully-managed alternative saved me a lot of buy to let costs in the long run. You don’t need to pay the management company out of your pocket, the developer of the property will take a small percentage from your gross profits and pay the management company whilst still leaving you with your agreed NET return each month, despite any repairs or void periods that occurred.
For someone like me who still wants to have a life whilst earning a passive income, the whole model is convenient and secure. Everything is agreed contractually by the developer and management company, so I know exactly how much I am going to get in my bank every month. I don’t need to worry about raising rents just to make enough to cover my monthly expenses.
Location, Location, Location – Buy To Let Hotspots in the UK
If you know about property, one motto that every investor or even home-buyer lives by is “location, location, location”. I will say though, that the beauty of a fully-managed buy-to-let investment is that it can be anywhere in the country, because everything is done for you which saves a lot of travelling. However, that doesn’t mean that you shouldn’t think about the location.
My favourite thing about the fully-managed model of investment is that I can take advantage of buy to let hotspots where purchase prices are low, and yields are high. Where I live in the UK’s capital, the properties are very expensive and a small investor like me will not make any profits. Where the money really is in the current market is up North. https://www.simplybusiness.co.uk/knowledge/articles/2016/06/is-the-north-west-the-best-place-for-buy-to-let-investment-in-uk/
The billions of pounds spent on The Northern Powerhouse regeneration project in cities like Liverpool, Manchester, Leeds, Sheffield, Hull, and Newcastle has made the North of England a target for business-savvy, money-hungry investors around the world. As a result, I would suggest doing your own due diligence and looking for the areas with the best returns rather than choosing an area that is close to you or popular (as there will be more competition).
What I think you should take away from this article is that there is no ‘one size fits all’ method when it comes to property investing. I have asked many investors for their tips and advice Some worked like a charm, and others not so well. I have managed to find a strategy that works for me and my goals, which is what I am going to share on this blog. To summarise, fully-managed buy-to-let investments offer the investor a flexible lifestyle unlike the traditional landlord method of investment. They are also more secure because a rental yield is agreed upon during the exchange of contracts, which eliminates a lot of worries that a first-time investor may have.