What kind of investor are you?
Investing in property can be a lucrative enterprise. According to Investopedia, residential investments average a return of around 10.6% over a 20-year period – much more than you’d current earn with ISAs and Pensions.
Before you start however, you should manage your expectations by deciding just what kind of investor you hope to be. Are you happy just dipping your toe in as a traditional buy-to-let landlord or have you set your sights on something altogether bigger?
To help you decide, we’ve broken down the different types of property investor and routes for your investment. Whatever kind you are, Cubitt & West are here to provide bespoke advice that’s tailored to your situation. Get in touch with our property investment team now to help you to move forward with your venture.
Types of Property Investor
As an Active Investor, you’ll be completely hands-on, devoting time and energy into your property search, maximising your rental yield and ultimately, the return on your investment.
Active Investors will be fully involved with their let – either as a private landlord or an owner of multiple properties. They’ll fully understand the options open to them and will have weighed up the pros and cons of letting their property privately or using a lettings agent to take care of everything for them.
Passive Investors will devote little time to property searches and looking into the legal ins-and-outs of lettings. Perhaps this isn’t your full-time job or you’ve fallen into becoming a landlord by accident? In any case, you’d probably benefit from a little help here and there – either by taking a look at our Landlord Guides or by using a lettings agent such as Cubitt & West to fully or partially manage your let.
Granted, lettings can be a bit of a minefield but if done properly, letting a property can deliver great results. You might find after doing your research that employing an expert to guide you is the best route to take. After all, they’re responsible for keeping you and your investment safe and legal, as well as delivering a return on your investment. We are more than happy to tailor our service to your needs, from part to full management, whichever is best for you.
Related: What’s included in a Managed Let?
If you’re an Analytical Investor, you’re somewhere in between the Passive and Active Investor camps. You’ll take your time over choosing the right investment – you are unlikely to rush into anything. However, that being said, you will devote considerable energy into examining the property market, looking for the so-called ‘golden egg’ – the right property in the right area which will achieve a decent rental yield and, eventually, a good resale profit.
Types of property investment
Standard Buy-to-Let investor
When you think of property investment, you usually envision a Standard Buy-to-Let investor – and with good reason; many successful large-scale property investors start their career as a landlord for a single rental property.
Standard Buy-to-Let investors may have chosen this path or had it chosen for them, as a result of an inherited property or change in their life situation. Perhaps you’re about to move in with a new partner but are not quite ready to sell your current home? In any case, Buy-to-Let ventures are a solid form of speculation, and a good place to start if you’re hoping to forge a career as a property investor.
How to be a successful Buy-to-Let investor? Providing you do your homework and swot up on the latest lettings information, it’s entirely possible to make a respectable income as a Buy-to-Let Investor. And, if you ever need a little help, you could opt to have a managed letting, whereby a lettings agent will look after some, if not all, of your Buy-to-Let.
Best suited to… All investors
Student lettings or HMO
Student lettings or HMOs (Houses of Multiple Occupancy) can be very lucrative. After all, by renting a single property out to multiple tenants, you’re effectively doubling – or even tripling – your rental income.
However, becoming a landlord for an HMO isn’t for the faint-hearted. An HMO applies to a property which houses three or more occupants who aren’t part of the same ‘household’ – for instance, a family. As such, the rules and regulations around HMOs are, quite rightly, designed to ensure landlords don’t exploit their tenants by offering sub-par accommodation whilst charging a premium.
If you let your property as an HMO, you’ll almost definitely need to apply for a license, especially if your home is on three levels, is being rented to five or more tenants who will share toilet, bathroom and/or kitchen facilities.
Although the return you’ll achieve is likely to be far higher as an HMO landlord, this will almost certainly become a full-time job – one which will require you to keep a close eye on your budget. HMOs tend to have a higher turnover of tenants which can prove costly to landlords, both in terms of void periods and letting agent admin fees, which you are also liable for.
How to be a successful HMO investor? Keep up with the latest legislation concerning HMOs, or recruit a lettings agent to do this for you, and ensure that you remain compliant. Also, don’t ever cut corners, especially with regards to the upkeep of your property. Okay, you may save a few pounds here and there by opting for the cheapest fixtures and fittings, but the cost of losing a good tenant is likely to be far higher in the long-run.
Best suited to… Active investor
Purchasing a property before it’s even built could be a savvy form of investment. Not only is the market price for this property often cheaper – both in terms of the discount you’ll receive and the appreciation you’ll achieve while the property is still being built – it’ll also allow you to weigh-in on how the property is finished.
As with HMOs, Off-plan investment shouldn’t be entered into lightly. Bear in mind that it’s down to you – and you alone – to conduct due diligence on the property developer and check that the build is progressing to schedule.
How to be a successful Off-plan investor? Before you even look into investment opportunities, seek advice from other Off-plan investors or property experts, such as Cubitt & West. Find out exactly what’s required and make sure that, whatever happens, you’re protected. You should bear in mind that if, for whatever reason, you fail to complete, property developers are well within their rights to sue you. Do your research ahead of time and go into your investment with your eyes wide open.
Best suited to… Analytical investor
For more advice about becoming a property investor, get in touch with our lettings team.