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For those thinking of buying a property to let, the concept of doing so can prove daunting for some, but budding property investors should not be deterred! If approached properly, it can offer lucrative medium to long-term returns, and we hope the information contained within this section of our website proves useful, especially to those thinking of embarking on their first journey into this sector of the property market.

The concept of buying to let is where a property is purchased for the sole purpose of it being rented out to tenants. The two main benefits are the monthly rent that is generated and the increase in the value of the property concerned over the period of time it is owned.

There is no perfect answer to this as every investor’s circumstances, budgets and objectives will be different. However, as a general guide any property purchased should be structurally sound and, in a condition suitable for it to be rented out to tenants.  It should be located in a popular area that will experience strong interest from prospective tenants, on a consistent basis whilst rented out, but also appeal to buyers as and when a decision may be made to sell it at some point in the future.
 
Anyone interested in finding out more should get in touch with one of our buy to let consultants where advice is free and without obligation. To get in touch either email: buytolet@beresfords.co.uk or call 01245 975853.

Before any investor commences their journey with buy to let, they should firstly establish an affordable budget. Otherwise, a great deal of time can be wasted looking at properties that are unaffordable or simply unaffordable.
 
When funding a buy to let purchase there are various ways of doing so, so it is always best to seek advice from a qualified individual. Ideally, look to utilise the service of an Independent Mortgage Advisor as they have access to a much wider range of products and rates than someone solely working for one institution such as a Bank or Building Society.
 
Beresfords retain a team of individual mortgage advisors who are fully Independent and have access to the hundreds of different options from a whole host of different lenders.  For more information you can ask one of our buy to let specialists to put you in touch.  Initial advice and quotations are available free of charge.

People invest in buy to let for a wide range of reasons.

Some will want to see immediate income from the rent generated whilst others are more focused on the potential longer-term gains which may be available as the value of the property increases over time. Generally, most investors seek a mix of decent levels of rent and strong capital growth potential as the property’s value increases.
 
If a loan has been used to help acquire the property, the rent which the tenants pay will service this and as time moves on. If structured properly from the outset the mortgage will reduce, thus creating additional equity in the property.
 
Properties can be purchased initially and operated on a buy to let basis, but then used at some point in the future once children have grown up as somewhere for them to reside. Alternatively, the property can be sold and the profits generated used as deposits for children to buy their first home.
 
Over time, profits generated or the extra equity produced can be used as deposits to buy additional investment properties, thus increasing the size of an investor’s portfolio.

There is no perfect location, but these simple tips should help point you in the right direction. Buying in a location that can demonstrate consistent demand from prospective tenants but is also located in an area that will prove popular with prospective buyers as and when the property may be sold in the future is really important. Depending on the type of tenants you may wish to attract, having certain facilities nearby can also be advantageous. Some examples would include universities for those considering student lets, hospitals where properties surrounding it will attract interest from those working within these facilities wanting somewhere to live nearby or established commercial centres or cities that attract a large and established workforce. 
 
Notwithstanding all of the above, it should also be remembered that some prospective tenants seek a slightly quieter way of life, so properties in less built-up areas can also prove popular but from a smaller audience.
 
Investors will need to be sure that wherever they invest the area can demonstrate a decent increase in average property prices over a reasonable period of time, which we consider to be 5-20 years. This is most commonly referred to by investors as ‘capital growth’.  As a general rule of thumb, the longer a property is retained, the more it is likely to increase in value, thus improving the potential capital gain that will be secured as and when the property is sold. Also, providing demand continues to remain strong the levels of rent generated will also improve.
 
As far as the areas we cover as a Company are concerned, our inter-active section headed ‘Where should I Buy’ should provide you with more specific information that helps make more informed decisions.

To work out a rental yield, you should add up the monthly rent that a property is expected to generate over a 12-month period.  The collective amount should then be divided into the price that you have or would expect to pay for the property. This should provide you with a percentage which is commonly known as the ‘gross rental yield’.  However, it should be remembered that with certain properties there will be fixed costs which cannot be offset on to tenants. This is particularly relevant with apartments that carry ongoing service charges and ground rents etc.  Also, any money spent on an investment property over a year will need to be taken into consideration.  When faced with these types of scenarios, there is a second yield known as a ‘net yield’.  This is ultimately the net amount of money monthly or annually that an investor will be left with from the rent generated after all costs and expenses have been deducted.

Capital growth potential is a term used to track the potential increase in value of the property over time, beyond the price it was purchased for.
 
A simple example of this would be a property purchased for £200,000 and sold 10 years later for £300,000. The increase in value over that period was £100,000, which represents an uplift in percentage terms of 50% between £200,000 and £300,000 or an average increase in value of £10,000 per year over 10 years. Collectively, the increase in value of £100,000 would equate to a 50% capital growth.
 
There are no set figures from which to work, as the level of increases in average selling prices across the UK will vary considerably. Some investors will be attracted by particular geographical locations where properties can be purchased much cheaper. They can also offer better gross yields from the rent generated. However, in some instances, even though they can offer similar percentages of capital growth to those located in more expensive areas, the actual financial returns in monetary terms can be significantly less.
 
A simple example could be where a property is purchased for £100,000 and sells 10 years later for £200,000. The capital growth is 50%. Applying the same increases to a property purchased for £150,000 and increasing in value over the same period by an identical percentage would mean the property would be worth £300,000 in 10 years’ time and would have increased by an extra £50,000 (£150,000 in total).
 
Depending on an individual investor’s personal circumstances, some may be seeking higher yields at the expense of some capital growth whilst others opt for stronger capital growth potential and sacrifice yield. Of course, almost every investor will seek the best of both worlds and look for the highest capital growth, potential and highest gross yields, but often some form of compromise is necessary one way or the other.

There are a number of factors that will determine the final returns an investor will secure. 
 
Firstly, it will depend on what price the investor paid for the property at the outset, how long they owned it and the final price that they sold it for.
Secondly, the amount of money spent on the property during ownership as this will ultimately have to be taken into consideration when calculating the net return.
 
Finally, different geographical areas increase or decrease in value at different rates, so much will depend on where a particular property is located.

As with any investment, there are no guarantees in terms of likely returns.
 
However, bricks and mortar has, over many years now, proved very resilient and outperformed more mainstream types of savings options. Average selling prices in the UK overall have consistently increased over reasonable periods of and related loans are reduced in size over time, thus generating additional equity. 
 
Anyone thinking of investing in a buy to let property must of course understand that there are risks involved, but a sensible investor will look to forge good working relationships with a credible sales and letting agent who can provide sound and reliable advice on an ongoing basis, especially in terms of how to get started, what and where to buy.
 
Within our ‘Where should I Buy’ section you will see that we track the average selling prices of all properties located in specific geographical locations which we cover across Essex and into Greater London. It is very easy to also identify the ‘peaks and troughs’ in the market, and in most cases, over a 20-year period, the downturns in the market have been relatively infrequent, and where they have arisen, they have only been evident for a relatively short period of time.
 
Anyone looking to invest in Buy to Let to ‘make a fast buck’ should look elsewhere as the real returns will only materialise by holding the property investment for a sensible period of at least 5 years, but ideally 10 or more.

Beresfords are quite unique in that we retain a specific individual whose sole purpose is to advise and assist buy to let investors, be they seasoned landlords or those entering this sector of the market for the very first time.
 
Our buy to let team can assist with as little or as much as an investor may require, but for those starting their journey for the very first time, we can literally hold their hand throughout the process.
 
Without realising it most individuals looking for a property to buy for this purpose will spend hours trawling recognised property portals. Unfortunately, the information provided by all of them is not really relevant to an investor, as often it will not provide any indication of what the property which is being promoted for sale could generate in rent or list details of any ongoing service charges etc.  To assist with this our buy to let team pre-select properties considered ideal for this purpose and provide all the relevant information required to make informed decisions. 
More information is available from our specialist team who can be contacted either via email buytolet@beresfords.co.uk or by telephone 01245 975853. Alternatively, you can view our latest list of available properties via this link: 
Current property investment properties for sale in Essex (beresfords.co.uk)