If you have ever considered buy a property to let it out, then here are my rules of the Grantham buy to let market .....
When I talk to potential investors, they are often concerned whether the property they buy will let. They needn’t be – it doesn’t matter if it’s a palace or a flea pit – everything lets, but that’s not a recommendation to buy a flea pit!
The question they should be asking is WHO it will let to – a 3 bed in the town centre is far more likely to attract sharers than a family for example. Every now I will talk to a landlord who with a property that he’s been unable to let through another agent. I know without seeing it that either
- it’s badly presented or
- he’s overpriced it.
- There isn’t usually a 3
YOU will not live in the property you buy. As such, whether YOU like it isn’t the primary consideration! This is a business transaction, and as such the question is whether it works from a business perspective? A classic example is the Earlesfield – it’s not the best place, but I’ve never known a landlord be short of a tenant in there!
Keep Your Figures Realistic
Grantham people need a lot of money to afford a deposit at the moment, so many are renting instead. This means there’s good demand for rental property, and lettings agents can rent most things, often for a premium. However at some point this will change. As such don’t assume that just because you can currently rent a tatty property, that will always be the case, and don’t assume because some estate agent is promising to get you £x in rental, that it will rent at that price for ever. Do your figures on a worst case scenario and you should end up with your expectations being exceeded, not unrealised.
Condition Is Important
Most letting agents prefer landlords to give them well presented properties in worse areas, than badly presented properties in good areas. That’s because nice tenants want nice properties, and as Grantham has very few no go areas, people are more likely to be flexible on where they live, as opposed to what they live in. As such you should either buy a nice property, or buy a grubby one and make it nice. Don’t buy a grubby one and expect a tenant to take it as it is. Any tenant that does take it probably won’t be that good a tenant.
Watch them! I know most of the agents in Grantham, and most of them are very good agents. That's not to say there aren't bad agents, either way they are all paid by a vendor to SELL YOU a property, NOT paid by you to help you buy. As such they may not be as ‘on your side’ as they seem! Don’t get pressured into buying a property until you have a good feel for the market – if you miss out on a good deal, another will appear sooner or later. The market is good, but it isn’t like London. When you’re viewing a horrible property and the agent is saying it’s “fine as a rental” they are simply demonstrating they don’t know much about lettings.
Some people clearly invest in property expecting there never to be any problems throughout their duration of ownership. This is a touch naïve, irrespective of the property you buy and the area you buy in. Your buy to let property is a business, and like any business, it will have problem customers at some point. You can mitigate your risk by instructing an agent that knows their stuff, and by insuring sensibly – the two big risks of buy to let (tenant doesn’t pay and tenant damages property) are both fully insurable. But even with this done you should expect hiccups at some point, so keep some money for a rainy day and if you’re the sort of person who would find some end of tenancy cleaning or a tenant losing their keys stressful, maybe something like stocks and shares would be a less personal way to invest your money!