Investing

Advice for buy-to-let property investment

When looking at a potential property investment, there are many different avenues you can take so that the investment suits your personal and business needs. Knowing your options when it comes to property investment can help you make an informed decision and create the best possible revenue stream for your investment. In this article we go over the basics of buy-to-let property investments, so you can invest confidently. For potential investments and more information, go to this website.

Buy-to-let

Renting properties to tenants gives you an investment model of regular payments with the long-term goal of future gains down the line. Returns on your buy-to-let investment come from the rental income exceeding costs combined with the increase in value of the bought property as time progresses.

HMOS

A house of multiple occupants is a rental property that is inhabited by more than two people who are not part of the same family. Each room is rented out to each individual who then share communal areas. The pros of HMOS tend to be the increased rent revenue potential as many rooms in a property can be turned into bedrooms to be rented. The downside of this would be that with more occupants in a property, the associated management time and costs increase. This is also true for the increased amount of regulations and licensing issues. One upside to consider is that if a tenant stops paying, you will still be able to gain revenue from the other tenants in the property.

Student properties are still HMOS, yet there are some key differences in the characteristics of the contracts and potential investment returns. Typically, student contracts are for fixed periods of time which provides some certainty to the state of your investment. Student contracts also tend to be singular join contracts that all the tenants sign on to. This means that if one tenant stops paying or leaves, the other tenants are liable for the rent until a new tenant can be found.

Traditional lets

As the name suggests, traditional lets are for properties that house two or fewer people. Property investment of this kind is fairly simple and just requires sound initial consultation. If you have done your research right and you find a tenant who pays the rent accordingly, there shouldn’t be too many issues. Management requirements tend to be low and regulations are less restrictive than with HMOS. The flipside to having predictable returns is that the revenue stream may not be as high than if you section the property off to be rented as an HMO.

Holiday lets

Short-term accommodation rental investments such as this have the potential to become incredibly profitable. This relies chiefly on the ability of your investment to produce significant occupancy throughout the year. Creating high occupancy levels though requires high involvement with constant changeovers of tenants and constant marketing to attract those tenants. If this achieved however, you can gain high profits and benefit from no chance of having to evict as well as preferential tax treatment when compared to other kinds of buy-to-let investments.

 

These are the main forms of buy-to-let property investments. When you’re thinking of investing, bear these options in mind so you can make the right choice and get the best possible investment for your needs.

 

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