Are New-builds A Good Buy-To-Let Investment?
The short answer is, yes, of course, new-builds are. But that does not mean all are a wise choice. Investing in property is a complicated process and delves much deeper than what you can afford and what you can make.
The New-builds Targets
In another one of our recent articles, we talked about how the government target of 300,000 new homes a year isn’t being met. But there are obviously opportunities available. There is currently a lot of demand at the moment, and construction companies just can’t build them fast enough. Which introduces us to purchasing off plan properties.
Investing In Off-Plan Property
For those who may not know, off-plan property is one investors buy before it has been completed. So in terms of buy-to-let, it is not quite ready to house tenants. There are many pros and cons to off-plan property. It is important to note that things can change in terms of completion dates. That aside, off-plan properties are highly desirable investment opportunities.
The Principles of Property Investment
Any type of property investment, whether houses, flats, refurbs, or new builds adhere to basic investing principles. Due diligence is always needed. Research the area and what is located nearby in terms of transportation, schooling, development and recreation. Are there any transportation links? How far from the city centre? If satisfied with the location, next, look into the figures. Note how much the property is selling for, what the rental yield is, and whether or not it has the capacity for growth.
New Build Rental Yields
In all honesty, some new build developments have pretty low rental yields. Glamorous they may be, but if the rental yields are around 3 or 4% then it’s going to be relatively difficult to make it a long term buy-to-let strategy. Overall you will want to ensure that the figures work out in the long term. Not forgetting, of course, that management fees, maintenance, and general running costs are covered. Otherwise, it may be challenging to make a profit.
Investing Tips For Off Plan Properties
These days a majority of off-plan properties have strong aesthetic appeal. The designs are fantastic, they are generally located in prime areas, and they showcase a desirable growth profile. Sometimes it seems too good to be true, doesn’t it? Well, going back to what we mentioned previously, off-plan properties can sometimes alter during construction. Mostly in terms of completion dates. It is advisable to research the development company. Have a look at their track record. You should gain an understanding of whether the investment opportunity really will be as good as it seems. Most of the time buying off-plan means that you can snag property for a much better price as you will have ‘gotten in early’, so to speak. Already, this could leave you in the plus.
Added Benefits to Purchasing New-builds
Putting all of the property investment lingo to the side, there are some added benefits to purchasing a new build for a buy-to-let investment. The primary one being that once it is officially yours, it is ready to go. There is no need for a lick of paint or any type of refurbishment as it is brand new. Tenants are able to move in straight away whether you opted for furnished or unfurnished. As part of an official agreement to be more green as a country, there are many more building requirements that need to be met now as opposed to twenty plus years ago. This results in new build developments being a lot more energy efficient than older properties. Saving both you and your tenant money.
Another benefit is that new builds are generally targets for professionals and entrepreneurs. This is down to the development being modern.
Any property investment should involve much research and a good deal of weighing up the pros and cons. New build properties can be excellent buy-to-let investments as long as the sums work out and the tenant profile fits the bill.