Propwealth’s frequently asked questions. If you can’t find the info, please email us.
What is Buy-to-Let property?
In the UK there is a massive demand for properties to purchase and subsequently lease out. The venture is popular with investors, because if the property is bought well in terms of position and area, the rent will come in as positive cash flow
What type of return are we getting?
In Liverpool and some other northern cities investors are looking for a 5% + yield.
We prefer mid-terraced Victorian homes, studios and one bedroom apartments that we can renovate and add value. This is because they are built to last and people like living close to transport links, including undergrounds and bus routes. Properties of interest could include a stand-alone home that we can split into two apartments, or sometimes a property we can split into a number of one or two bedroom units.
Our developer of choice observes each property and decides what is going to be the best plan of action to make the most of the space. Every property we look at requires a different approach.
In London, we work with quality developers to bring as much value to the property as possible. Regeneration areas are key, as well as properties being built around a new station. In London, the Crossrail is currently under construction so we are currently focusing on the new stations across London
Are there many people doing Buy-to-Let?
In the UK the demand for a second or third property is huge. The UK has a massive buy-to-let culture. Property meetings are held all over the UK where like-minded investors discuss opportunities and trade properties.
If an area is yielding a decent return, then the competition is steep.
What type of property do you look for?
In Liverpool and some other northern cities investors are looking for a 5% plus yield.
We prefer mid terraced Victorian homes, studios and one bedroom apartments that we can renovate and add value. They are built to last and people like living close to transport links including undergrounds and bus routes. This could be a stand alone home that we can split into two apartments and sometimes is a property we can split into a number of one or two bedroom units.
The developer looks at each property and decides what is going to be the best plan of action. Every property we look at requires a different approach.
In London, we work with good developers to bring as much value to the property as possible. Regeneration areas are key as well as properties going up around a new station. In London, the Crossrail is currently under construction so we look around the new stations across London.
What areas do you work in?
Our main focuses are Greater London, Liverpool and Birmingham.
In London we explore the “bread and butter” properties. These properties start at around £290,000 for a one bedroom.
In Liverpool, we look at the normal, everyday properties that people want to live in. These start at around £50,000 for a large studio flat, upwards to larger two bedrooms at £59,000.
Do you work with many banks?
We have a few preferred lenders that we can introduce to you, however our preferences can change over time and we ultimately work with whichever lender will give us and our investors the finance. .
Banks will only lend on purchases of over £100,000 (and a maximum 60% loan to value) to non-resident investors. Having a UK or EU passport but not living in the UK still classifies you as non-resident.
How long do we hold onto the property for?
We suggest never selling. We look at our portfolio cash flow as our retirement fund.
The greatest way to build up a portfolio is slowly and carefully. If it does not show a minimum gross yield of 5%+ then we do not invest.
Why are the yields so high in Liverpool?
Low property prices mean higher yields. One issue is that the banks are not lending to first-time buyers without a large deposit of up to 40% in many cases.
This drives the rental market and makes it a perfect time for the buy-to-let investor.
How long will this last?
This is a difficult question to answer, as the property climate is always liable to change. However, we make the best of the property market and will look to other areas as the climate changes and adapts. In essence, if we continue to find great yielding property, we will continue to buy.
Nevertheless, in spite of all the changes in the world and the economy in recent times, property seems to always remain the one sure investment.
Who looks after finding the tenant?
The developer has a team in place that will interview, credit check and generally get a feel for the tenant.
They will also collect the rent and deduct the bills for you as part of their service.
If you currently own a property you will know that all tenants are different and a bad tenant can slip through occasionally.
Our advice is to get involved in your property. If the rent is late then pick up the phone and find out why. If you cannot view your property each year then try to send a friend along just to drive past. It is not an everyday involvement but some attention and care needs to be taken on the property.
Do you buy old and renovate or new builds?
We have two approaches. In London, the days of renovating and finding value for buy-to-let are difficult so we focus on capital growth and new builds in this area.
In Liverpool, we try and find old or in bad condition so that we can add value to the units.
Liverpool is normally a complete refurb with new kitchens, wiring, central heating and new bathrooms
Do you do new builds?
We focus on new builds in London and Birmingham. Once again we look for the up and coming areas and we only invest with larger companies.
Currently, we are dealing with Berkeley Homes on some really fantastic value developments in London.
How do I know that the area is good for tenants?
We do extensive research in the areas and will not suggest the property if you are going to battle to get a tenant.
We invest a lot of our time looking at areas and identifying their potential. This is part of the Due Diligence and the absolute key to the success of a buy-to-let property. We also encourage our investors to put the postal code into Google and “drive around” the area online.
Are tenants scarce and how long does it take to find tenants?
It depends mainly on the development.
In London, there is a huge demand for tenants. In our north London development, we find that we can place tenants within a couple of days to a few weeks.
In Liverpool it ranges from a week to 2 months.
In all circumstances, our chosen agents do extensive background checks and screening on each potential tenant.
Are you Buy-To-Let t investors?
This is the core of what we do and how Propwealth came about.
We are continually searching for property deals. We either buy them ourselves or try to package and sell them on to other like-minded property investors.
Why one bedroom flats?
We prefer one bedroom and studios as the demand for tenants is strong plus the yield is normally excellent.
On saying this we have a few larger two and three bedroom units and we still get very good yields on these.
Do you always need to add value?
We seldom find units that we can simply take over and move tenants into. However, adding value can be a very rewarding part of investing in property. It can include, but is not limited to, painting, cleaning gardens, or taking down a dry wall to make it more open plan. One of the most exciting concepts is adding another room, which can add great value to the property. Please be advised, however, that this level of work requires prior-approval from local councils.