Buy to let investment is a misunderstood fellow. One of the riskiest forms of investment, buy to let investing is often underestimated, many people believe it is easy and far too many people think it is just a case of buying a property and renting it out. That said, it is also one of the most lucrative forms of investment, and can be easier than many other investments when done properly.
We won't be covering any of that here, but you can find many guides on this site, here we will simply focus on the key benefits. What would make you choose buy to let, before you would go and read any of those guides. Here we go:
Buy to let property investment is buying a property to rent it out. While commercial property investments can also be bought to rent out, buy to let investing is the term given to residential property investment. The art of being a landlord. In most countries, anyone can buy a property, and anyone can rent out their property, as long as they adhere to the law and submit their income from all properties to their taxes.
Not many investments pay out a fixed amount every month. Buy to let investments do. The net return on investment is the rental income minus costs for maintenance and such like, plus capital appreciation over the term.
Long Term Gains
While we all know how drastic the crashes can be, over the long term residential property is known to see consistent appreciation. In the UK property prices tend to grow by 10% per year over the long term average. This is an added bonus of investment buy to let, because we earn an income from rental and then an added bonus return at the end of the term. No other investment gives a bonus at the end.
Buy to let return on investment is calculated based on net rental income plus capital appreciation, with rent rises and price appreciation going at the average rate of inflation over the last 10 years, with inflation then being taken off the value of the returns to balance the scale. This means that the returns of an investment are easily measured, meaning we can minimise risk and effectively plan. Most sites provide a specialist buy to let investment calculator.
If you use a management company then buy to let investment is hands-free; the management company takes care of everything and you just bank the returns, minus the management companies 10% commission.
*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.