Steve and Sharon have been investing in property since early 2000s and set up their current business, Foxdog Properties, in 2012. They draw on their previous professions, Steve in engineering and Sharon as a senior programme manager with a FTSE 100 company, to effectively manage a growing portfolio and team. Their business specialises in providing an end-to-end service for investors, from sourcing the property, through to project management of refurbishments, finding a tenant and on-going day-to-day management activities. Take a look at their website: www.fdp1.co.uk.
What is buy-to-let (BTL)?
The term buy-to-let (BTL) is used to describe the situation in which an individual buys a property and rents it out to a tenant. The BTL acronym relates to residential property only; investing in commercial property being another topic altogether.
BTL is a relatively new sector, only coming into existence in its present form in 1996.
Why invest in property?
Property is one of the main asset classes and provides an alternative to stocks, commodities and bonds for a balanced portfolio.
A quick glance at The Sunday Times Rich List shows that many in this list have made or consolidated their fortunes through property.
Although the property market is cyclical like any market, historic data shows property values increase over the long term.
Depending on where in the country you invest, depends on the returns you can achieve. For example, with a single residence on the south coast you may typically achieve yields as low as 3%, however in the North West, you can expect gross yields of 7-9% and the potential for a healthy capital gain.
With effective planning, investing in property can form part of your estate that you can leave to future generations.
What are the downsides of residential property investment?
Property is an illiquid asset class, meaning it is not appropriate if you need to access funds quickly. Also, it’s essential to buy well in the first instance, as not all property is a good investment.
Many people seeking to invest in property would be wise to use the services of a sourcing agent – typically someone who knows an area well, and who will seek to get you a heavily discounted property, that cash-flows well (don’t forget, the estate agent is working for the vendor not you!).
Ideally you should buy below market value (meaning you have equity from day one) and for cashflow – capital gain being more of the cherry on top of the cake rather than the cake its self.
What’s the future for property investing?
As with any investments, past performance is not a guarantee of future success, however, even with property being a political hot potato right now, the national housing shortage will remain for a long time to come. This basic concept of supply demand means that investing in residential property to rent out to tenants is likely to remain an attractive proposition.
Thanks to Foxdog Properties for contributing this article.