If you are thinking of becoming a Buy-to-Let Landlord there are many things to consider when looking for a property. The most important – what exactly are you looking to achieve.
It may be income, capital growth or an investment that can be passed down to your children or a combination of all of these.
Not all properties meet each of these criteria to the same degree. As a general rule property with a high yield is more likely to suffer low capital growth and the reverse is also true.
Most landlords try to buy a property that has a sensible growth potential with a yield that will at least cover their costs.
Average yield in Tamworth? 4% to 6%
Generally a two bedroom modern house which is in a good location is the best buy.
Victorian may have lots of character and appeal but the maintenance of these properties tend to be higher.
A flat will usually be leasehold so you have the annual service charges to consider. Flats tend to have a lower capital growth as there are usually quite a few on the market.
A three bedroom house is a good buy however there will be more wear and tear from a family occupying the property so your maintenance charges are generally higher.
If you are sitting on the fence and contemplating when’s the right time to buy ? well it’s a bit like having kids – when is the right time to start a family. By procrastinating and never committing, your property journey will never start!
Our property journey started some 10 years ago with at least another 10 years spent hesitating. When we finally did dip our toes into the Buy-to-Let market it was the best thing we ever did, that is apart from starting our family.
Don’t forget …You will have to pay stamp duty for second home purchases,. Details here
There are some advantages of setting up a limited company to purchase the property, but they are limited unless you are buying several properties. An accountant will be able to advise.
Almost certainly you will need to pay income tax on the income, but you should take advice from an accountant and you will need to complete tax returns annually.
You will need to pay CGT (capital Gains Tax) when you sell assuming the profit exceeds your annual allowance and purchasing costs. There are things you can do to mitigate this cost which your accountant can help you with.
So like us, if you are in property for the long haul, you won’t get rich quickly however you will make money in years to come and you may even enjoy being a property landlord!
If you are thinking of getting into the property rental market and don’t know where to start, speak to us for impartial advice and guidance to get the best return on your investment. For more information about other potential investment properties that we could introduce you to, or to ask about our thoughts on your own investment choices, call us now on 01827 425195, you can always email me on Lorraine@hallandthompson.co.uk
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Happy House Hunting