The 7 Benefits Of Becoming A Buy-To-Let Investor Explained

Buy To Let Investing So you have decided that the under the mattress isn’t the best place to make the most of the money you have and are considering investing in property instead. Here are 7 reasons why you should consider becoming a buy-to-let investor this year.

1. Benefit From Lower House Prices

Right now, we are reaching the end of a long period of falling house prices. The benefit of this to the buy-to-let investor is that this has led to an increase in distressed sales and lower prices as homeowners become desperate to sell.

This means it’s a buyer’s market for those with the cash to invest.

2. Enjoy High Incomes And Long-Term Capital Growth

With property prices now much lower than they were at the peak of the market, it has become far easier to source below market value properties that have excellent prospects for capital growth in the long term when the market fully recovers.

Being able to negotiate discounts is one of the most important skills a property investor needs to make sure sizeable equity is locked in and yields will be high from day one

3. Rising Rents Mean Rising Profits

In a market where mortgage lending is tight, rental markets see rapid growth and this is what we are seeing in most property markets including the UK. Rents have been rising by an average 1% a month in the UK for the past 12 months to the point where average rents hit an all-time high of £876 a month.

There are few signs that the restrictions on mortgage lending will be lifted anytime soon which means rents can only continue to rise for those unable to get on the mortgage ladder.

4. You Can Use The Bank’s Money To Build Your Portfolio

Mortgage lending might be restricted for first time buyers, but for those with cash to invest one of the benefits of becoming a buy-to-let investor is that you can have your pick of the available properties.

There are now 486 mortgage products on offer compared to 386 a year ago and interest rates have dropped from 5% a year ago to 4.79%.

5. Gearing/Leverage

Used to great effect by those who amassed fortunes from property investment prior to 2008, being in a position to take advantage of gearing is still one of the main benefits of buy-to -let investing. With all the new mortgage products on offer, you can now take advantage of one of the secrets to property wealth – gearing and leverage.

The beauty of investing in property is that for every 20% you put in, you get 5 times the capital appreciation on that amount. Assuming your rental payments cover 125% of your monthly mortgage payments, you can expect to make enough money from your first property to invest in your next property and so on.

6. Tax Breaks

You will need to make an appointment with you accountant to discuss some of the more complex rules around property investing. However one of the main benefits of being a buy-to-let investor is that you get to avoid Mr Taxman at least some of the time.

As a landlord you are able to deduct costs from the taxable portion of your rental income, and the interest portion of mortgage repayments as well as some of the maintenance costs connected with the property.

7. Property Is A Tangible Asset That Will Rise In Value Over Time

Unlike stocks and shares, property is a tangible asset that will continue to grow over time. Property prices rise on average by around 5% a year which is far more than you will get from cash savings accounts and ISAS which return 0.89% and 2.54% respectively.

When you invest in an area that has a high demand for rental property, the chances are your rental profit will also rise over time while your mortgage payments are kept low by a sound investment strategy.

Are you thinking of becoming a buy-to-let investor this year? Or do you consider other asset classes to be more attractive? Please leave your comments below.

Kind regards

Brett Tudor
Property Expert

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Categories: First Time Investor / Investment Property Strategy / Property Invest


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