13 March 2017
13 March 2017,

When investing in UK property, buyers have the opportunity to make profit in two ways – capital growth or rental yield. Rental yield offers a monthly income boost, and if you’ve got a property portfolio, can provide enough cash for a comfortable lifestyle. Capital growth is a longer-term investment – and comes in the form of a lump sum when you’ve sold the house.

Many investment properties in the UK offer both. However, before searching for buy-to-let property for sale, it’s important to work out which form of ROI is more useful to you, as this will help you to identify the right house for your needs.

Buy-to-Let Property for Sale Offering High Yields?

If you need regular income, or you need good cash flow to pay the mortgage on the house, look for a high yield buy-to-let property for sale. Generally speaking, cities offer the best yield, though of course, it depends on a number of factors, such as current interest rates, the price of the property in question, and tenant demand.

To find a property that offers a good rental yield, consider the following:

  • Is demand high in the area? High levels of demand push rental rates up, which translates as more profit for landlords.
  • Are house prices reasonable? If house prices are expensive, this means you’ll need to get a larger mortgage, and the monthly payments will eat into your rental yield.
  • Do tenants tend to stay for a long time? If you want to ensure a steady income from rent, you’ll need to be sure that your property won’t stand empty for extended periods.
  • What do property investment agents say? A good property investment agent will be able to tell you what the average rental yield is in the area. Anything over 8% is considered high.
  • What about interest rates? Be aware – mortgage interest rates can affect your net profit – both negatively and positively!

Make Money from Capital Growth?

The other way to make money through your property investment in the UK is capital growth. If you buy in the right area (and at the right price), the value of your house will go up, which means when you sell it on, you’ll make a good profit from it.

However, if you’re going for capital growth alone (without making money from rent) you’ll need to accept that the purchase will result in negative cash flow, until you sell the house. When looking for a property that offers good capital growth, consider the following:

  • Have house prices risen in the recent past? This will give you an idea of how desirable the area is, and whether there’s room for more growth.
  • Is the area due for significant regeneration? If the town or city is due to get a new train station (e.g. Crossrail) or is scheduled for major improvement, this can drive prices upwards.
  • Can you buy at a cheaper price? If you’re going for capital growth, you’ll need to buy as cheaply as possible, to ensure a good return. Buying a house at auction is a good way to save money, as is working with a professional property investment agent.

The Buy2Let Shop Limited

If you’re looking to invest in property in the UK, but aren’t sure where to start, talk to The Buy2Let Shop. We’re a team of expert property investment agents, and we’re here to help you find the right property at the perfect price.

To find out more about our services, which also include assistance with buying a house at auction, simply visit our website – The Buy2Let Shop – today.

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