If you are a first time buy to let investor, the entire process can seem as if you are buried under an avalanche of decisions to make – which lender should I use? what area should I buy in? should I buy a leasehold flat or a freehold house? what type of tenant should I look for? And on and on and on…….
Like anything in life, the trick is to break it down and prioritize. So, ask yourself, what is the most important thing I need to focus on?
Well, that is easy – the most important thing you need to look at is the bricks and mortar and by that I mean the property itself. That is what you are spending your precious funds on and that is what will potentially give you an income and hopefully a capital gain. After all, that is why you are even considering investing in the buy to let market.
There are many ways to find a property and the most frequently used method these days is online. When you enter “invest in property” on a search engine, you will be bombarded by companies offering all sorts of benefits and promising fantastic returns and untold riches. Slick presentations, videos and verbal wizardry could distract you from the basic premise, which is to buy a property at a reasonable price that will give you a return on your investment from day one.
This is where many fledgling investors make a serious mistake and believe in the BMV Myth.
There are many companies online that will offer you spectacularly low-priced property and talk about distressed sales and fast turnover, desperate sellers and how all you have to do is sign up with their company and you will make out like bandits. What you will find out is that they will very likely charge you thousands for the privilege – oh and you need to pay this upfront of course!
Long experience in the property industry has demonstrated that you get nothing for nothing and in fact, you can spend a lot of money and get a very poor result if you do not examine the deal you are offered with enough care and caution. The fact is, there are very few genuine below market value properties available these days and these are usually snapped up by experienced cash investors.
The properties you are likely to be offered are cheap for a reason. Location making it difficult or impossible to secure a mortgage, troublesome tenants, rent arrears and property in such poor condition that a successful mortgage valuation would be impossible are just some of the issues you could face after having parted with a substantial amount to secure a chance of purchasing the property.
Before you know it, you have spent a fortune on finder’s fees, broker fees, solicitors and valuations and end up being unable to proceed or that you have bought a property with major works or legal fees involved.
Are there genuine companies out there that could find you the elusive BMV, sure there are but they are hidden among the sharks.
So, look for value property in decent condition through a company that doesn’t promise the earth but will speak with you honestly and offer a property that will not have hidden surprises. They should be totally transparent about the property and able to provide all the information you need to make an informed decision.
In the long run, you will save money and sleep better.