When you are looking at potential investment properties, it is a totally different scenario to when you look for a property to live in. It doesn’t matter about that brand spanking new kitchen, nice decoration and a location which you love, because it isn’t going to be you that lives in it. Buying a buy-to-let property is like any other investment in the sense that you should act with your head, and not your heart.
You need to think about it differently. You should consider things like the rental demand in the area and for each type of property, the level of rent you could charge, the potential for capital growth. If you find a property which is suitable then make sure you can get it at a good price, if you can’t, move on and look for a different one. When you are an investor, you don’t need to get sucked in and meet the seller at the price they want, because it doesn’t matter to you if you can’t buy that particular house, there are plenty of options out there, and even if there isn’t you can always wait until there is. Being a buy-to-let investor is one of the strongest bargaining positions you can be in, so try and use it to your advantage.
One common scenario muddies the issue, when somebody wants to buy an investment property, with the view to live there in say 20 years time. This drags your emotions into the transaction, and can lead you into a poor investment decision. I would try and avoid getting yourself too caught up in this idea for many reasons. Firstly, there is a very good chance that in the future, your life and your preferences will have changed a lot, and you may not want to live in that property after all. Secondly, if you are looking at say 20 years, this is a long time to hold onto a bad investment, and could lose you a lot of money during that period. It might be a better idea to make a good investment choice now, then look at your options in the future of where you might buy to live in.
Jason Hinde FPFS, Cert SMP – Chartered Financial Planner
4th December 2017