Belvoir News Article
29/11/2007 - Cautious but Canny
- the smart investors’ guide to cashing in on rising rental demand
Despite daily headlines predicting nothing but doom and gloom for the property sector, there is still ample opportunity for the canny investor according to Mike Goddard, Chief Executive of Belvoir.
“Without a shadow of a doubt, property remains an excellent long term investment and we are seeing experienced investors step up a gear as they take advantage of current market conditions and invest in buy to let properties,” says Mike.
As predicted by Belvoir at the beginning of 2007, demand for rental property continues to rise across the country and the wise investor is still cashing in on this demand by doing their homework. Rather than viewing the property market as one large entity, Mike believes that the UK is made up of at least thirty different markets and, within each of these, there are further micro markets which are being driven by local demand.
“Conditions in the residential sales sector are certainly more challenging than in recent years but there are still plenty of investors buying properties on a buy to let basis,” says Mike. “The canny investor is, indeed, rubbing his hands together at present, as there has never been a better time to invest in buy to let if you get it right.
“While some beginners may be embarking on a steep learning curve, the investor with experience and knowledge of the rental sector never makes mistakes. The fact that many of them remain so active is a sure fire sign that the buy to let market remains very strong.” Mike offers would-be investors considering entering the buy to let market the following advice:
- Get advice from the right people. Use a lettings specialist to get an honest picture rather than an estate agent who may exaggerate rental demand to shift a property.
- Always approach the market from a tenant’s view rather than a landlord’s. Doing this will ensure that you make the right decisions every time.
- Always allow logic to override emotions when considering an investment.
- Search out pockets of opportunity within the local market by tapping into local expertise and market knowledge. Get advice on where to buy, at what price and the type and amount of demand.
- Open your mind to opportunities. For example an ex-local authority apartment may prove a better investment than a high spec apartment in a new development, or a four bedroom house might have potential to let for multiple occupations.
- If you are investing in multiple properties, spread your risks across different markets.
- Increase cash investments and reduce borrowing to insure against further interest rate rises.
- Use a good management company to protect your investment. The right company will earn their fee ten times over.
“Everyone thinks the property market is all about ‘location, location, location’ and while the area where you invest is important, I would argue that ‘management, management, management’ should be a buy to let investor’s mantra,” says Mike.
“Any investment must be protected. No-one wants to fall victim to a tenant who fails to pay rent, an empty property yielding no income and or indeed a property which has been destroyed by a rogue tenant, yet these scenarios are all too common among investors who attempt to manage their own properties. The canny investor cannot fail to see the opportunities presented by the current difficulties in the residential sales sector.”
“We all seem to have short memories,” he says. “But if we cast our minds back to the mid 90s, as property sales slumped, the lettings sector boomed. And as we anticipate sales stagnating rather than slumping during the course of 2008, so I predict that the rental sector will continue to enjoy solid, steady growth.
He concludes: “Whatever market or economic conditions prevail in future, the residential lettings sector will always survive. People will always need homes and changing
demographics including a rising population means that demand will continue to outstrip supply for the
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