Whether you are searching for your first buy-to-let investment or are simply adding to your portfolio, one of the first decisions you need to make is do you buy a new or old property?
There are plenty of things to consider, and to be honest there is no perfect answer, so here is a quick guide from Knight Property Management.
Purpose-built developments are popular with tenants because they usually come with allocated parking, lifts and security features, while often being near local amenities. Buying new also means any teething issues will be covered by the warranty.
Getting in early is key as many developers limit the number of properties available to investors. Buying off-plan also means you choose the fixtures and fittings to suit the type of tenant you wish to attract. Don’t go wild with the options list, stick to the standard selection to keep costs down.
Reserving an early plot has other advantages. A property investor in Cambridgeshire recently bought a one-bedroom apartment off-plan for £129,995. When the property was ready one year later an identical apartment in the second phase of the development was being marketed at £159,995 – that’s an increase of £30,000 or 23 per cent.
Of course, off-plan means the property may not be ready for months so you will not see an instant return on your investment. Buy-to-let mortgages on new properties also require a larger deposit, so make sure you do your sums before committing.
Whether it is a feature fireplace or wooden beams, some tenants simply prefer the charm and character of period buildings over the modern look.
The main benefit is a tenant may fall in love with your property and be willing to stay for the long term, minimising the risk of void periods. You may also see potential for major renovations, such as adding a bedroom or converting for multiple occupancy.
The downside when considering a pre-20th century property is the additional costs, including getting a full survey prior to purchase, urgent improvements and ongoing maintenance.
Whichever route you choose, set your budget and do your homework.
If you need advice on buy-to-let investments, call Knight Property Management on 01992 308181.