A Veteran’s Guide Of The Pros And Cons For Buy To Let Properties

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Buy to let can be a great investment if done correctly and really help you grow your wealth and safeguard for the future. So, here are some tips on how to make the most of it as well as some things to look out for.

What Are The Different Benefits Of Using A Buy-To-Let Option?

  • Return On Investment

The first benefit of opting for a buy-to-let option when entering the real estate market is a return on one’s investment.  The buy-to-let properties are typically advertised in terms of a rental yield with the figures being more advantages than those obtained when investing in other areas of real estate.  Of course, it is important to consider the addition and potentially hidden costs to this investment and determine how the costs can influence your rate of property return.

  • Capital Growth

There is not much you cannot buy that increases as dramatically as property has done in recent years.  Statistics indicate that real estate has increased by at least 8% in the last year alone with many areas showing double figures.  To improve your capital, it is worthwhile considering a buy-to-let property option. 

  • Mortgage Rates

Mortgage rates can be a difficult issue to manage because low rates need some time to settle, which is a reason why having a future plan can be beneficial.

  • Increased Security

As they say, land is no longer available and bricks and mortar are the most tangible investments available.  While there have been property market crashes in the past, this is not something that should be ignored.  By opting for a buy-to-let investment, you will increase your security of property and will be able to ride real estate crashes out should they occur.

What Are The Different Drawbacks To A Buy-To-Let Option?

  • Illiquidity

By opting for a buy-to-let property alternative, you will be placing your money in an agreement for a long period of time.  This means that in situations where you need to sell a property quickly, you may need to accept the lowest price to meet your needs.  The detrimental factor here is illiquidity.

  • Voids

A second con to the buy-to-let property is the inability to find different tenants.  It is possible that you will need to keep the property vacant while carrying out repairs, which can be a problem as you will still have to pay a mortgage without a tenant living in the property.

  • Charges And Tax

To cover the costs of buying a property, it is important that you consider the different charges and taxes implemented.  Typically, any buy-to-let property will present with solicitor’s fees, survey fees and stamp duty where second properties require an extra 3% stamp duty bill.  Capital gains tax is also required when selling the property which is a higher rate than other investments.

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