Buy-to-let properties are units that are bought for the purpose of renting out. Landlords prefer buy-to-let properties to help them increase their wealth once the prices go up in the market and supply them with a constant stream of income from the rent received. Owning a buy-to-let property is different from having a home, and thus, you get different ways of financing it if you are short of cash. You also need to comply with numerous legal responsibilities when you become a landlord.
Advantages of Buy-to-Let Properties
Whether you are taking the step to invest in buy-to-let for the first time or looking to add to your properties collection, there are numerous advantages that come with choosing them, making them quite lucrative. They include:
Higher Returns and Profits
Since people will always need a place to live, there will always be a demand for buy-to-let properties. Also, over the long term, prices are bound to increase, which translates to higher revenues for landlords. Property investments are the most reliable as they are tangible, controllable and understood to a certain extent. Once you are familiar with the industry, you can make huge returns from your buy-to-let properties.
One of the best things about owning buy-to-let properties is the fact that you can get an income in two ways. One is the rent that tenants pay for living on your property. The other is via capital growth that depends on the location of your unit. For example, regenerative areas in London are gaining demand, making property prices and yields from rentals to shoot up.
Since renting property is the preferred lifestyle trend, it is highly unlikely that you will experience void periods while letting. However, in case you have a unit that has not been occupied for some months, the loss of income during that time can be compensated by long-term property appreciation.
As an investor, you can benefit from getting reliable, long-term tenants. This, in turn, ensures that you get a steady and predictable income.
Are great Investment Choices
For such properties, you get an average return on investment of 8%. This is way higher than what you would get from a regular savings account. You can even make more if your investment is great. Since the presence of tenants all year long is a reliable source of income for you, it means that you don’t have to struggle to maintain a steady flow of cash.
Purchasing buy-to-let properties is a great way to reap the benefits of your investment. This is because the cost of an apartment is basically lower than that of a house. It means that you can buy in bulk and effectively build your building portfolio.
Help With Mortgage Repayments
When you rent out your property to tenants, they will end up paying the mortgage for you, in addition to providing you with extra income. In case you go for a low buy-to-let mortgage rate, it could help maximise your profits. This is because your monthly payments will end up being lower and thus, get higher profit margins.
Help with Tax Payments
This kind of properties can help you offset the costs against tax. Every tax year, you will be required to fill in a self-assessment tax return and also pay your tax bill. Some of the cost of tax can also be offset, including:
- Fees paid to the letting agents
- Interest on your mortgage repayments
- Council bills and tax
- Repair payments
- The cost of advertising the rental property
It is also possible to get tax relief to cover carpets, furnishings, sofas and carpets renovations and also maintenance repairs, excluding home improvements such as extensions.
Are Great Sources of Capital
If you need to release capital, you can easily sell the property. Sometimes, the unit could even be sold at a higher price than you initially paid for. Such kind of an investment property is great for getting retirement income since it keeps appreciating with time. As time goes by, you get more profits from the investment.
How Nova Financial Can Help
Nova is a company that has won multiple awards as a financial advisory firm. It is privately owned to assist in buy to let property matters. Its services include:
- Educating investors on all levels of buy-to-let properties
- Tax structuring and funding
- Assisting with property management properties
- Acquisition and sourcing
- Offering advice and guidance on how to structure a buy-to-let portfolio
All the above advantages demonstrate how beneficial it is to invest in buy to let properties.