Property Investment Advice: Why Get Started in Buy-to-Let Property?

In other words, why should you become a landlord? It’s a good question – and an especially good one to ask yourself, too. 

Although buy-to-let property investment is an extremely effective way to generate reliable, sustainable income, becoming a landlord isn’t right for everyone – it’s actually something my Portolio partner Ross and I were just discussing the other day. 

However, I’m by no means here to put you off! 

There are plenty of strong reasons why people get into buy-to-let property investment – and why it continues to be a very viable and solid investment option right now. 

With that in mind, and with over 20+ years of experience in property, I’m going to talk you through some of the reasons why it might be a good investment option for you – as well as provide you with some key insights and advice. 

So, why get started in buy-to-let property investment? 

In our recent survey, a whopping 73% of landlords still considered buy-to-let property a worthwhile investment – and off the back of 2020, that’s saying something. 

Right, let’s get into why that might be. Here are some of the main reasons why you might want to get started in buy-to-let property, and why it’s an attractive investment option for many investors. 

1. Proven to be a relatively safe investment

Property is widely considered to be probably the most tangible and solid (as in, bricks and mortar) investment you can make – and because of that, it’s easy for most people to get their head around – rather than merely seeing figures and graphs on a screen. 

It’s also easy to see and understand your predicted equity growth. As a typical rule of thumb, property values tend to always be higher at the end of the decade than they were at the start. 

2. Enjoy from a steady, predictable income

Buy-to-let property is a great way to supplement your income in a steady, consistent and predictable way. Every month, you know you’ll receive your rent (and how much of it will go to your letting agent, in your savings fund etc.) and can plan accordingly.

As a caveat, I’m not saying it’s completely passive, or should necessarily replace your other sources of income (but it can if you choose to make a career out of it and become a property professional with a wide-ranging portfolio). 

3. Benefit from the ability to leverage your funds 

Unlike other forms of investment, you can get capital return and make your money work harder by leveraging your funds with a mortgage. Leveraging in this way will allow you to invest in more properties, and build your portfolio quicker as part of your strategy. 

Finance is relatively cheap in the UK right now, and the right mortgage broker should be happy to help you explore your options, either now or in the future. 

4. Choose to be hands-off or hands-on 

Property renovation and DIY can be fun; it can even become a vocation. Or, it can become all-consuming and overwhelming, depending on how you feel about it. The benefit of buy-to-let property is that you can choose. 

A letting agent can either do all the hard work for you (including arranging all of your safety certifications, repairs and maintenance – for a small fee), or you can choose to do everything yourself. 

5. An inheritable investment 

By purchasing your buy-to-let as a limited company, you can make some of your family members shareholders, and therefore limit the amount of inheritance tax they would need to pay. 

This is just one of the benefits of buying as a limited company, however, there are some caveats to be aware of. You can read about it in more detail via our blog: ‘Should You Buy to Let as a Limited Company?’.

6. Know you’re providing a home for someone 

In the world we live in, people are always going to need somewhere to live. Knowing you’re providing a safe, fully-compliant and affordable home for someone should give you a good feeling. In other words, you’ll sleep well at night. 

The private rented sector plays such a vital role in housing and the local community, both in Scotland and in the UK as a whole. There are many landlords who feel proud to be a part of it. 

The most cost-effective way to get started in buy-to-let

There IS a lesser known way to invest in buy-to-let property that allows you to bypass much of the costs, frustrating gaps in revenue, and hassle usually associated with purchasing a buy-to-let; buying tenanted property. 

By buying a fully-compliant, fully-furnished property with the tenants already living there, you can receive rental income on Day 1 – without having to jump through some of the major hoops (such as void periods, finding a letting agent and getting it tenant-ready).

When investing in a tenanted property, you’ll feel rest assured the rent is being paid, and have peace of mind knowing you’re getting a good tenant. In short, you’ll be making a safe, savvy, and well-informed buy-to-let property investment. 

You’ll even be able to see what your exact yield will be – before you agree to buy. Also, when your buy-to-let property is already tenanted, you know that it has passed all the required safety tests (incl. electrical and gas) for letting.

You’ll likely even be able to keep the same letting agent! (Or find a new one – your call)

TIP: For a better understanding of all the main benefits when it comes to investing in tenanted property, check out ourrecent blog post. 

Carefully consider costs 

Even though buying a tenanted property can save you considerably on costs, it’s still vitally important for you to consider all the costs involved, and to make sure you have enough in the bank to cover all eventualities. 

For instance, I recommend to ensure you have at least three to six months’ rent in the bank to cover six months’ mortgage payments – just in case. This is what’s known as a ‘rainy day fund’. 

After all, you never know when you’ll need to cover emergencies such as a broken down boiler, or roof repairs! 

Of course, all of this does depend on how many properties you have in your portfolio. Your rainy day fund might allow for 20% of your properties to be vacant for six months. 

But that doesn’t mean you should ignore ordinary wear and tear, either. 

You should aim to take a lifecycle approach to your property, which involves looking at your kitchen, bathroom, white goods and appliances, and planning in advance for when they’ll likely need to be replaced. 

Advice from the property pros 

Like I said in the beginning, being a landlord and the responsibility that comes with buy-to-let property investment… isn’t for everyone. There are certain misconceptions about it being a very passive income – which isn’t entirely true. 

The best advice I can give you is to carefully consider your options, and your lifestyle. Do your numbers (seek advice from an accountant if needed) and pay careful attention to your returns. Have a percentage in mind, and ensure it’s robustly challenged. 

Don’t just take my word for it, either. Due diligence and doing your own research (which is probably how you reached this blog) is so vitally important. Speak to people you know with properties, and ask them about what it’s like to be a landlord. 

Join property groups on Facebook and start some conversations. Tell them you’d like to get started in buy-to-let property investment, and are looking for advice.

Think about your strategy, and constantly review it to make sure your property is working for you. What started well on Day 1 may not work so well in five years’ time. 

Your strategy will evolve over time, just as you will as you move through your property journey. And that’s not a bad thing! 

In summary…

So, there we have it! If you’re thinking you’d like to get started in buy-to-let property, the above should hopefully have given you some food for thought. 

There are so many reasons to get into buy-to-let property, from peace of mind with a relatively safe investment (safe as houses!) and a steady, predictable income to supplement your day job, to property management and providing a home for someone. 

If you’re seriously considering getting started in buy-to-let – for more specifically, buying a tenanted property – feel free to get in touch. We’re always on hand to provide some free advice. 

Wishing you the best of luck!

Written by Chris Wood, MD & Founder of Portolio

Get in touch on 07812 164 842 or email [email protected]

Other blogs you might be interested in: 

• Scottish Property Investors: What Finance Options Are Available Right Now?
• Scottish Property Investment in 2021: Predictions from 13 of the Top Property Experts
• The Final Stage of Section 24 and What it Means for Landlords
• Should You Buy to Let as a Limited Company? [Pros and Cons]
• Should You Invest In Property During COVID-19?