2012: The Perfect Year for Buying

House prices fell 0.6 per cent last month, marking a total drop of 1.5 per cent over the past year. With the price of houses and flats plunging nationwide, now is the perfect time to purchase that second property to let out. Why not search for your perfect property on sites such as Zoopla?

With the current economic climate still in decline, an investment in bricks and mortar is a much sounder acquisition than the volatile world of stock market shares and low rate savings. While these options may offer you faster short term returns, it is widely regarded that property provides the bigger pay off in the long term.

It is advisable to go into buy-to-let investments with a large enough capital to pay a large deposit, but when it comes to sourcing that mortgage don’t be drawn immediately to the bank and building societies. Specialist buy-to-let brokers and lenders can often offer much better rates and better expert advice alongside them.

Typically, buy-to-let lenders will want monthly rental agreements to cover 125% of the mortgage repayments, in addition to a 15% deposit to protect them from falling prices. However, recent research into the market has shown that many are now asking for deposits of 25% and upwards, so a canny buyer should shop around to find the best deals.

When looking for your prospective property, keep your target tenant in mind as well as the age-old saying of ’location, location, location’. If you’re thinking to invest in a buy-to-let for students for example, you’ll find your ideal property in a thriving university city, with easy access to transport routes, plenty of room, and if not totally furnished at least part furnished.

However, if you’re contemplating investment in a property to let for a family home it’s wiser to look at areas further afield from big cities with schools nearby. Families also appreciate the opportunity to furnish and decorate the property to their taste. Before you buy, always put yourself in your tenants’ shoes and consider what would attract them.

When it comes to rent, you will need to ensure that the total cost is attractive and affordable for your ideal tenant as well as guaranteeing a decent return on your investment. Work out your annual return by subtracting your yearly mortgage cost from your annual rent, and then work this sum out as a percentage of the deposit you put down.

Overall, buying-to-let, especially now, is a perfect investment for those looking for a long-term income return that’s highly customizable and safe.

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