Investing in UK Buy to Let property can seem like a daunting task for South Africans. Many people are put off by the long-distance logistics involved as well as where and how to buy.

However, according to Propwealth, a UK based company specialising in UK investments this can easily be overcome.

Craig Illman, a South African director says your method of investing should focus on making money when you buy, and not just from the property itself. He offers 5 successful rules that investors should follow. Propwealth calls this strategy the L-E-A-R-N formula.

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1. L for location

Always invest in areas of regeneration which are close to transport and in neighbourhoods with many job opportunities. You can source this information from the local councils as well as general UK press articles, or by following a developer who specialises in regeneration.

Transport programmes like the new high-speed rail HS2 line linking the north to the UK south is already having a positive capital growth impact on these regions. Tenants want easy links to both work and main capital which will make your investment far easier to rent.

2. E for entity

Your major financial challenge is tax on rentals but there are ways to save money through buying the right way. For example, acquiring the property in the correct entity like a limited company will not only reduce tax liabilities but will also offer a great method of developing your portfolio over time.

The general rule of thumb owing to the annual costs is if you are simply buying one property then keep it in your name, for more than two then look at a separate legal entity like a company. Limited companies also assist with inheritance planning strategies as well.

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3. A for add

Add value by either buying old and renovating or getting in early in new off-plan schemes before they become available to mainstream emotional buyers. Long-distance renovation can prove troublesome, so that’s why new builds are very popular with overseas buyers. Early purchase in developments that still need to be built adds capital growth immediately. If you combine this with buying in regeneration zones, you have a near-perfect combination.

4. R for representatives

You will need a strong team of representatives. These typically include mortgage brokers, accountants, solicitors for the purchase process, and rental agents who source and manage your tenant. They should also offer affordable maintenance in case of repairs or general wear and tear. It is extremely important to have this team in place before investing as they are specialists in their fields who will both offer the correct advice and save you a lot of money in the long run.

5. N for never sell

Always invest with the concept of never selling in mind. Cash flow is what it’s about. If you buy correctly, you will have a cash-generating asset for years to come. This has all the elements of inflation-beating, long-term wealth creation.

However, should you need to sell, your exit should be to sell to the normal UK residential market. This allows you to market extensively to residential buyers through high street estate agents and obtain a quick sale. So, buy with this in mind as well.

“The LEARN concept might over-simplify things but it works. Once you’ve invested in one property the strategy becomes both easier to implement and almost second nature. The LEARN idea will create a strong foundation for investing plus allow your asset to generate cash flow successfully for years to come,” says Illman.