If you have ever considered buy a property to let it out, then here are my rules of the Grantham buy to let market .....
Everything
Lets
When I talk
to potential investors, they are often concerned whether the property they buy
will let. They needn’t be – it doesn’t matter if it’s a palace or a flea pit –
everything lets, but that’s not a recommendation to buy a flea pit!
The question
they should be asking is WHO it will let to – a 3 bed in the town centre is far
more likely to attract sharers than a family for example. Every now I will talk
to a landlord who with a property that
he’s been unable to let through another agent. I know without seeing it that
either
- it’s badly presented or
- he’s overpriced it.
- There isn’t usually a 3
Detach
Yourself
YOU will not
live in the property you buy. As such, whether YOU like it isn’t the primary
consideration! This is a business transaction, and as such the question is
whether it works from a business perspective? A classic example is the
Earlesfield – it’s not the best place, but I’ve never known a landlord be short
of a tenant in there!
Keep Your
Figures Realistic
Grantham people need
a lot of money to afford a deposit at the moment, so many are renting instead.
This means there’s good demand for rental property, and lettings agents can
rent most things, often for a premium. However at some point this will change.
As such don’t assume that just because you can currently rent a tatty property,
that will always be the case, and don’t assume because some estate agent is
promising to get you £x in rental, that it will rent at that price for ever. Do
your figures on a worst case scenario and you should end up with your
expectations being exceeded, not unrealised.
Condition Is
Important
Most letting
agents prefer landlords to give them well presented properties in worse areas,
than badly presented properties in good areas. That’s because nice tenants want
nice properties, and as Grantham has very few no go areas, people are more
likely to be flexible on where they live, as opposed to what they live in. As
such you should either buy a nice property, or buy a grubby one and make it
nice. Don’t buy a grubby one and expect a tenant to take it as it is. Any
tenant that does take it probably won’t be that good a tenant.
Estate
Agents
Watch them!
I know most of the agents in Grantham, and most of them are very good agents. That's not to say there aren't bad agents, either way they are all paid by a vendor to
SELL YOU a property, NOT paid by you to help you buy. As such they may not be
as ‘on your side’ as they seem! Don’t get pressured into buying a property
until you have a good feel for the market – if you miss out on a good deal,
another will appear sooner or later. The market is good, but it isn’t like
London. When you’re viewing a horrible property and the agent is saying it’s “fine
as a rental” they are simply demonstrating they don’t know much about lettings.
Plain
Sailing?
Some people
clearly invest in property expecting there never to be any problems throughout
their duration of ownership. This is a touch naïve, irrespective of the
property you buy and the area you buy in. Your buy to let property is a
business, and like any business, it will have problem customers at some point.
You can mitigate your risk by instructing an agent that knows their stuff, and
by insuring sensibly – the two big risks of buy to let (tenant doesn’t pay and
tenant damages property) are both fully insurable. But even with this done you
should expect hiccups at
some point, so keep some money for a rainy day and if you’re the sort of person
who would find some end of tenancy cleaning or a tenant losing their keys
stressful, maybe something like stocks and shares would be a less personal way
to invest your money!
