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Why buy to let is a good investment

Five reasons why buy to let is a good investment – and our five top tips to help you get the most out of it

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Some landlords are ‘accidental landlords’ – people thrust into property letting by circumstances out of their control. But a great many chose to get into the business too, and hundreds of people are wondering whether or not they should follow suit.

For those people, here are five reasons why buy to let is a good investment – and five top tips to help you get the most out of it.

1. There’ll always be demand for rental property

If you look at the history of the private rental sector, you’ll see that the number of people privately renting has pretty much doubled in the last two-and-a-bit decades; now, around a fifth of people in the UK are renting, and the number is growing. Demand for quality rented accommodation is going nowhere in a hurry, and any businessperson will tell you that providing a highly sought-after service is a smart move.

Top tip: Pick your area. Just because demand is high doesn’t mean every area is a goldmine. Some areas are more desirable than others, many will have maximum rent limited by local factors like competition and employment, and others are so expensive that you’ll either have to buy massively below market value or attract the crème de la crème of opulent tenants to see any kind of profit. See our expert guide to the buy to let investment for more information.

2. It’s one of the best investment choices out there

We’re still in something of a recession, and when that happens, interest rates fall. This means landlords get better buy to let mortgage deals, yes, but it also means that savings aren’t working very hard. ‘Bricks and mortar’ is generally considered a solid investment, and in a sluggish economy, it’s even sounder.

Top tip: Do the maths. Of course, no investment is fool-proof, and you’ll want to get out your calculator if you want to make the most out of it. Making a good investment is about managing your exposure to risk, adding up your costs and calculating your profit. The more of this you can do in advance, the better.

3. You can invest for now or the future

Buy to let is a versatile investment; you can choose to invest for capital growth, income, or a mixture of the two. Recent reports suggest that more new landlords are looking for short-term gains, but many still see it as a viable way to reinforce or substitute their pension or their children’s inheritance.

Top tip: Have a game plan. It’s a good idea to know in advance what you’d like to gain from your investment so you can best plan your strategy. Check out our article Capital growth vs. income for more information on the types of investment you can make.

4. The buy to let market is in good shape

Rock-bottom interest rates mean that buy to let mortgages may well be cheaper now than at any time before. There’s also a lot of product choice in the market. Buy to let mortgages will often also be granted on the basis of the investment, rather than the borrower’s income, so if you’ve found the right property, securing finance for it will be easier.

Top tip: Shop around. The first deal you happen across probably won’t be the best, and what mortgage is right for you will very much depend on your circumstances and plans for your investment. This is where market experience is invaluable – for expert help finding the right buy to let mortgage, fill in our BTL quote form, and an adviser will call you back.

5. You’ll be part of a big step forward

Britain has, for the last century at least, been a nation that places a lot of importance on home-ownership. We’re approaching a time when all this might change, however. The role of the PRS in the UK housing market is shifting, and our current government is trying to shape it into a successful, forward-thinking industry. People who become landlords now may well be witnessing a massive change in UK housing, and can help make the change a positive one.

Top tip: Be a good landlord. Do your homework, know your responsibilities, know your tenants’ rights, and provide a good service. The rented sector is becoming more and more important in today’s society, which means the need for good landlords is huge; it also means the bad eggs that let the side down will be left behind.

It takes a lot of work to be a good landlord, but our Landlord Advice Centre is a good starting point – why not pay it a visit?

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Amelia Vargo is an online marketing executive for CT Capital. Amelia writes for Turnkey Mortgages, Turnkey Landlords, TurnKey Bridging, TurnKey Life and Commercial Trust.