Auction Finance Limited, a provider of fast funding for auction purchases is reporting increasing interest in auction rooms from buy-to-let investors.
Chris Baguley, Director at Auction Finance Limited, said:
"The buy-to-let market is the perfect option for investors, while interest rates and property prices are low. Savvy investors are continuing to snap up properties before prices rise and are looking to auction rooms as a great way to grab a bargain."
Yields continue to remain strong with greater demand than ever and rents are expected to increase in the next twelve months.
Would-be investors are doing their research carefully and choosing good quality areas with strong employment and city centre locations where there is no problem in finding prospective tenants.
Mr Baguley continues:
"With tenant demand remaining high, there is less of a risk of void periods and management fees. Canny buy-to-let investors will continue to benefit from a strong source of income."
Auction Finance Limited typically lends 70% to 75% on a property and loan sizes vary from £25,000 to £1m, with an average loan size of £74,500.
For those looking to invest in a property at auction for the first time, Auction Finance Limited offers these top tips:
Research the market:
Ensuring you are familiar with the pitfalls, as well as the benefits, is essential. Speak to people you may know who are already experienced buy-to-letters, and read guides on the subject.
Choose a location:
Choosing a property for buy-to-let is all about location. Tenants, unlike buyers, can move out with one months' notice and will not hang around for a property which does not suit their needs.
Depending on your target market, you will need to consider the proximity to local schools, transport links, and night life. Check out the competition you will face using property sites. You will be able to see what the going rent is for certain areas and, over time, see which properties take longer to rent out and which areas are popular.
Do the maths:
All too often the excitement of looking around houses takes over. Sit down and put pen to paper before you view properties and write down the cost of the house and the likely rental yield. Also make sure you have a contingency fund for when the property is not being rented and mortgage repayments must be met, as well as repairs which ought to be fixed quickly else your tenant will vote with their feet.
Consider looking further afield:
Most buy-to-let investors only consider properties near to where they live. While it's easy to see why, your town may not be the best investment despite your inside knowledge. There may be other towns in need of rental properties which you should seek out. Many buy-to-let property owners employ the services of an agent to handle tenants, which means that being local to the property is not so necessary.
Know the potential pitfalls:
Don't ignore what could go wrong. How many months can you afford to pay the mortgage should the property sit empty for long periods? Will you require your money out quickly? A simple rule of thumb is to factor in the property sitting empty for two months of the year to provide a buffer. If you are unable to cover the cost of a major repair not covered by insurance, such as the heating system, don't invest yet.
