Buy-To-Let
The Secrets of Successful Buy-To-Let Landlords Uncovered!
Buy-to-let has boomed in the past and is still an area of huge potential growth. In 2007 the National Landlords Association researched landlord behaviour in the buy-to-let sector. The survey asked 320 landlords about their approach to buy-to-let and started with their entry into the BTL sector.
Just over half of the landlords polled got started in buy-to-let by purchasing a specific property which they planned to rent out. However, a significant proportion got into buy-to-let by deciding to try renting a property that already belonged to them. This accounted for about 20 per cent of buy-to-let landlords, with a further 9 per cent getting started in BTL by renting out a property that they had inherited.
In the buy-to-let market, location is the key factor that drives landlords to invest, with more than 80 per cent of landlords citing this as a crucial deciding factor. The research found that BTL landlords also tend to be conservative in their choice of location, with most preferring to keep property close to home. Some 56 per cent of landlords only buy property within 10 miles of their home and another 20 per cent buy within 50 miles of home.
Sticking to home is important because landlords will know the region. They are also more likely to be able to manage properties themselves, cutting down on management costs and increasing return on investment.
Location Drives BTL Factors
Location also drives the other important factors in buy-to-let properties. The next two factors are potential for growth in value and saleability, and both of these are affected by location and by the fourth factor, which is the condition of the BTL property.
The research also found that other factors regarding buy-to-let properties have to do with what tenants will be looking for, with obvious effects on rentability and return on investment. These include the number of bedrooms and bathrooms a property has, the local amenities (restaurants, shops, schools and transport), the neighbourhood and environment, security and whether the property has a garden.
Once landlords have identified a suitable property, they don't hang around, with more than a third making an offer within a few hours of viewing a property. There are even a few who offer without seeing the property at all. This may be because the market is competitive, with many landlords competing with first time buyers for certain properties.
The research also suggested the areas that landlords see as growth areas for buy-to-let in the next five years. These include flats for young professionals, which are favoured by 60 per cent of landlords. Studio flats are less popular favoured with just one in ten. New legislation relating to houses in multiple occupation (HMOs) seems to be driving some landlords to abandon student flats in favour of family houses. These could be the future of buy-to-let.
