Have you ever considered investing in property to make some money off the property market? Buy-to-let is becoming one of the sought-after investment opportunities. Mainly because of how manageable it is compared to intangible stocks and shares.
We can explain what buy-to-let property investments are, whether it is right for you – and the risks and rewards behind it.
What is a Buy-to-Let Property Investment?
The name ‘buy-to-let’ covers what the investment is all about – a person will buy a property with the sole intention of letting it out to tenants.
It’s different in the sense of homeownership as you are effectively running a business. You’ll rent out spaces for people to live in to create a steady income.
Is Buy-to-Let Property Investment for me?
Buy-to-let property investment can be significantly rewarding. However, it is essential for those considering it to understand the risks and governance that follow the opportunity.
If you are willing to accept the following points, then buy-to-let might be right for you:
• A buy-to-let is a long-term investment with no short-term gains
• It may take a long time to make any profit
• Recognize the risks of the property market, such as dips in value
• You are responsible for the costs of maintenance and upkeep
• Your property may not make a profit at all
• Comprehend the financial risks involved in borrowing money to purchase
If the general terms seem feasible to you – buy-to-let would be an investment worth your while.
How Much Can I Profit from a Buy-to-Let Property Investment?
Depending on the local market, a fair profit can be made from renting out your property or selling it when it increases in value. There are a few factors that will affect how much money you can make from your buy-to-let investment.
More money will be made if:
• The local housing market has a property value increase
• There is a steady flow of reputable tenants
• There are low maintenance and running costs of the property
Things that will affect profit:
• Tenants who do not keep up with rental payments
• Frequent maintenance and high upkeep
• You struggle to find tenants
• Local house prices fall
What Are the Risks of Buy-to-Let Property Investment?
Most of the risks involved around your buy-to-let property investment pertain to the housing market. This can be volatile – and it’s possible for your property to significantly decrease in value as well as increase. Outlined risks of the opportunity include:
• Having to sell for less than what you paid for it
• Repairs, damages, and upkeep costs exceeding rental income
• Market factors outside of your control affect what you can charge in rent
What Else Should I Know About a Buy-to-Let Property?
There are a few other things you’ll want to know before making a buy-to-let property investment.
Some costs can occur, just like purchasing any home. Those include, but are not limited to:
• Stamp Duty Land Tax
• Surveyor’s fees
• Legal fees
Because buy-to-let properties are such a lucrative investment – they are subject to fraud like any other asset. There are insurances offered to protect your investments, such as:
• Landlord Insurance
• Building Insurance
Your purchased property and your rental income are taxable – even if you are not living in the property. A buy-to-let investment will be subject to:
• Stamp Duty Land Tax (England and Northern Ireland)
• Land and Building Transaction Tax (Scotland)
• Land Transaction Tax (Wales)
Thinking of Investing in a Buy-to-Let Property in North London?
Buy-to-let property investments in North London can be a very gratifying opportunity despite the risks it carries. Should you be considering the venture, contact us and we can guide you through the process and can explain all the above information in more detail.