Low interest rates, stock market uncertainty, lower house prices, rising rents and improving mortgage deals are all contributing to buy-to-let once more looking an attractive investment opportunity for anyone with enough money to buy outright or pay a significant deposit on property.
But potential investors need to be aware that despite being an investment in bricks and mortar, any investment income from buy-to-let carries risks regarding the future returns from both rental income and the value of the capital invested.
A number of internet sources offer advice about what to consider when thinking about a buy-to-let investment. Like other risky investments, the buy-to-let market is subject to economic forces that will never be under your control, like interest rate changes, Government housing policy and regulation. There are, however, a number of factors which you should consider as being within your control – researching the market to find a suitable property and who the potential tenants might be; working out capital and revenue costs and possible income carefully; and deciding on how you are going to practically manage, service and maintain your buy-to-let.
You should be prepared to think differently. Investing in your own property, which you occupy, is usually a day-to-day necessity of life – buy-to-let property is not. You would like to see the cost to you of living in your own property minimised, whether through reducing your mortgage or by limiting the cost of keeping your property in good order.
By investing in a buy-to-let property, you are looking to maximise the rental cost to a tenant who is not you, and practically minimise the cost of maintaining the property, not occupied by you. In the end, unless you have an overpowering desire to own buy-to-let property, check the investment market thoroughly and make sure that there are no alternative investments offering a comparable return on your money, with a lot less hassle! Ask yourself is it worth it.