You may have heard on the national news today that rents in the UK are on the rise. This will be no surprise to experienced investors who know that there is always a rise in rents when house prices are falling as they are currently.
With property prices falling and rents rising it should become easer for you to make deals stack up which has been an issue over the last few years when prices where rising much faster than rents.
That fact is that now more and more people are looking to rent. First time buyers are postponing the decision to buy and homeowners in debt are selling their houses to clear the debt and renting instead.
What this means for you, is that if there is an oversupply of rental property in your area the excess supply should get soaked up, and if there is a shortage of rental property the rents will rise much quicker.
When looking to buy investment property you need to follow the traditional principles of only buying where there will be good long term demand for rental property. Location and facilities are always important.
The issue that we still face is that the average interest rate for a buy to let mortgage is currently 7%, so instead of buying single AST properties, many investors are looking at multi let properties which should give a much higher return and a positive cash flow even if the borrowing is at 7%
As I keep on saying now is a great time to buy as long as:
1) You buy at a very good price, well below the current market value.
2) You are very fussy about that you buy to ensure you only buy property that will be easy to rent.
3) You are buying for the long term as prices will continue to fall until they stabilise and start to rise in maybe 2 to 3 years.
4) The property stacks up when you buy it and you can afford to hold the property
5) You have a safety cash reserve to act as a buffer in case you have any voids or unexpected costs.
Follow these five basic steps and you should be able to acquire some good long term investments for a very good price.