Getting the most from your Investment Property

The main aim of an investment property is to furnish you, the landlord, with a regular income that can be classed as profit. In order to do this you first need to find a property that qualifies for a buy to let mortgage. Once you have found a suitable property you then need to buy it for the lowest price possible, refurbish it if necessary and rent it out for the maximum amount it can achieve. Easier said than done, right?

 Finding houses that don’t break the bank

There are several methods you can use to find low price investment properties. The first is to search for – or use a specialist agent to search for – BMV (below market value) properties. This type of investment property is often put on the market by owners who are facing repossession, and as a result you can generally buy them for 30-40% less than their true market value.

Similarly you might want to look around for what are called probate properties. This type of investment property is often inherited by individuals who don’t want or need it and are willing to sell quickly for a reduced price. Auction properties can also sometimes be bought for low prices, but bear in mind that most probate and auction properties will require cosmetic make-overs before being classed as quality rental properties.

Renovations, repairs and refurbishment

Buying a probate or auction property for buy to let purposes will often mean you entail additional costs in terms of renovations, repairs and refurbishment. Buying a £100,000 property for £75,000 is all well and good, but if you then have to spend £20,000 on renovations and repairs you don’t stand to make much profit by renting it out.

The answer is to try and find a BMV property, or indeed a probate or auction property, that is in good structural condition and only requires minor refurbishment e.g. new bathroom suite, new kitchen units, carpets and decoration. The less you have to spend making your investment property into a comfortable living space the more profit you make in the long run.

It is important to take into account the rental potential of the property when deciding how much to spend on refurbishment though. So for example, if your buy to let mortgage payment is £500 per month and your maximum achievable rent figure is £1000 per month you don’t want to have to pay more than a few hundred pounds per month towards a refurbishment loan.

Marketing your rental property

Once you have your investment property in a rentable condition you need to market it. Of course you can do this yourself and save a few pounds but remember that you will always be the first point of contact when anything goes wrong with the property…even in the middle of the night.

If you prefer to be a backseat landlord you might want to put your property in the hands of your local letting agents. They not only market the property for you, they also sort out any problems encountered by the tenants, so leaving you to continue building your investment property portfolio.