Buy to Let Secrets All Property Investors Should Know
It is no secret that buy-to-let properties are usually capital-intensive investments. This inherently calls for forethought. If you are going to put your money into something, it is often best to try and figure out all the best strategies that will ensure you get a good return on that investment. A term I like to use is “exit strategy”, which I first heard from the Aussie investor Rick Otton. The point of an exit strategy is that you are always aware of how you are going to cash in your property. And this mindset is crucial for anyone who wants to profit from their investment.
As a buy-to-let property investor, I have come to realise that one of the best ways to do this is to stay informed and use that information to constantly mould your strategies as per the prevailing market swings.
Although this might seem like an unnecessarily unstable strategy of investment, what you need to realise is that like every other plan of action, investment strategies need to be highly dynamic. Especially faced with such a fast paced world where various duties and taxes might change (like the recent 3% rise on stamp duty) with little warning. There are a great number of factors that will influence just how much money you can make at any given time.
With that in mind, here are some buy to let secrets I have learned that all property investors should know.
Invest in flats rather than houses
As beautiful and dignified as investing in stand-alone houses might sound, flats simply bring in more numbers. You are in this business to make money. You can always buy your passion project houses once you have made a killing in the real estate market. But if you want to make money much faster in buy-to-let property investment, then flats would be the best bet.
Always add value
One of the biggest problems that most landlords face today is the fact that most of their buy-to-let properties remain empty or only ever achieve abysmal occupancy rates. To keep this from happening to you, find different ways to add value to your property. Well-managed properties; well-renovated bathrooms and kitchens; provision of various in-house recreational amenities and so forth are some of the things you can do to add value to your property. In return, you will find that the property attracts a wider variety of clientele who will be reluctant to move and thus keeping your occupancy rate high.
Aim for tax efficiency
It might sound made up, but you will not believe how many landlords are paying taxes that they actually do not have to. By hiring a tax advisor, you will get to learn exactly what taxes need to be paid based on your location and the kind of property you own. Never pay any taxes that you absolutely do not have to pay.
Pay closer attention to the unfashionable suburbs
Although you are generally advised to buy property in wealthy and fashionable suburbs, there are some unfashionable suburbs that can actually fetch great returns. Most people think that low-income housing is a poor investment. With the right management, you could actually find that you get more return on investment from these buildings because they do not cost as much to buy but bring in a steady flow of rental income.
Try as much as you can to tap into the knowledge of the locals while looking for properties to buy; partner with dependable and knowledgeable professionals such as lawyers, tax advisors, and renovators; diversify your investments and most of all, be patient. These are the valuable buy to let secrets that will make you money in good time.