10:48 AM, 18th October 2013, About 9 years ago
Provision for regular investment into rental properties needs a well considered BuytoLet strategy.
A sensible Rainy Day fund is essential and prudent investors will factor this in when purchasing their rental investment and adopt an on-going approach to property upgrades.
This is very much in keeping with Mark’s advise in the Basic fundamentals of a buy to let property investment strategy.
Standards in the BuytoLet market have improved and tenants are less willing to accept sub standard and unloved properties paying a higher rent for well presented and well located properties. Specification of the property is important and landlords need to consider regular upgrade and maintenance works at the very least between tenancies and every three years.
Zoe Rose, head of lettings for Strutt & Parker said “if you regularly maintain your rental property on an annual basis, even when your tenant is situ, then overall you are likely to spend less than a major upgrade every three to five years. You are also sending a clear message to your tenant that you are a conscientious landlord that cares about them and the property. They in return are likely to look after your investment and appreciate their surroundings and do their very best to keep your property in immaculate order.”
“We do have a few clients that have enjoyed healthy rent increases over three to five years linked to RPI without doing much to their property during the tenancy. When the property comes back to market, they are shocked to learn that they need to spend significant funds in order to support the same level of rent achieved before.”
“Like any investment the return can go up or down and you wouldn’t run any other assets dry and expect to maintain the same level of return. It is the same with rental property. You need to keep aside sufficient funds to upgrade and reinvest in order to optimise the returns.”
Stephanie McMahon said “the increase in the Private Rented Sector across London with 79% more household renting in 2011 than 2001, shows just how large the market is. In these types of conditions investors must put back more to reap the financial benefits. Tenants are looking for longer leases too, with 17% increase in those taking longer leases in the third quarter of 2013. Therefore landlords need to invest more to fight for those tenants.”
“It is much better to plan properly than be stung with an extended void period or accepting a very low rent just to secure a tenant. Having a well thought out maintenance and upgrade plan really does pay dividends in the end.”
The Landlords Calculator designed for Property118 readers is very easy to use and can help you with your own BuytoLet strategy. You don’t need to download any extra software whatsoever. It allows you to analyse returns and other important numbers relating to any residential investment property deal with ease.
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