As house prices in the UK have reduced over the last 2 years and 2011 predicted to be flat is it a good opportunity to buy to let?

In the decade up to 2007 buy to let investors were the fuel that flamed the housing market. Prior to 2000 only the professionals bought into residential property but lots of TV shows like Homes under the Hammer and property ladder showing ordinary people make tens of thousands of pounds brought property investing to the masses.

Double digit growth per year meant pensions were out of the window and property was in. But along came 2007 and overnight the buy to let market crashed. Landlords with tens of thousands of pounds equity in their properties saw these gains nullified and worse was to come for landlords buying at the top of the market that were now sitting in negative equity. However, those bright landlords with tracker mortgages would see their mortgage payments plunge.

So if 2011 a good time to invest in UK residential property?

Rental demand has never been higher in the UK with good quality property not lasting long in letting agents books. So let’s look at some tips to make sure you get your investment right:-

Do your sums

Low Cost Estate Agents sell to investors on a regular basis but you can spot the novice a mile away. Recently we had an investor look at a 2 bedroom flat. She had £150,000 cash to buy, she was looking to pay £145,000 for a property with a rental valuation of £600 per calendar month (pcm). When I found out she was a cash buyer I suggested that she bought two properties one at £60,000 with a rental of £350 pcm and another at £80,000 with a rental of £500pcm. Two reasons, being a numbers person I would rather collect £850 pcm from two properties than £600 from one (an extra £3000 per annum) plus you spread the risk if the tenant fails to pay. She naively bought the £145,000 property because she loved it. See next section.

Don’t just buy because you like it

Ok you must like a property to actually buy it but remember you will not be living in the property. Chose a property in an area that actually has rental demand. Buying because a property is low priced can have devastating effect when it comes to re-selling. Before you buy to let, ask a letting agent where to buy not an estate agent. An estate agent will tell you all property will be a good rental property because they want a sale. A letting agent will actually tell you which category of property is letting.

Insure Insure Insure

There are two core types of insurance for landlords, property and rental insurance. The first is self explanatory, building insurance is a must and you should always take a minimum of say £5000 contents on top (even if you let unfurnished) and you can always take policies like malicious damage to cover the worst case scenarios. Although more expensive than your normal household policy you must advise the insurance company that the insurance is for an investment property, or they won’t pay out in the event of a claim. The other insurance which is often disregarded by landlords is rental guarantee insurance. For about £15 a month insurance companies will pay the rent should the tenant fail to do so. The insurance company normally vet the tenant first. For such a low fee this is an absolute must.

Haggle

You have indentified an area and you have seen a few properties for sale and want to buy one of them, time to haggle. As an investor you have the same power as a first time buyer and estate agents will adore you. Start low and be prepared to walk away if the seller does not reduce price. Let the estate agent know that you are interested in a few properties but prefer their property. They don’t want to lose a sale. Remember in Scotland to be offering around 10% under the Home Reports Valuation.

Hand on or Hands off?

You should run any property investment like a business. Do you have the time to spend looking after the property and collect the rent. Or do you outsource this work to a letting agent. Letting agents will take about 12% of your rent per month, so build this into your figures. If it is a fairly new property and not much will go wrong with the property consider managing the whole thing yourself. An older property generally means things go wrong more often and you may want to use an agent. Plus a letting agent will provide referencing and back ground checks on any potential tenant.

Put £100,000 in the bank today and get 3% a return of £3000 or buy a property for £100,000 and get £6000 in rental returns doubling your return to 6%, so looks good on paper. Haggle the original price down and you may be sitting on a few thousand pounds of equity built in. Buy in the right location at the right price and 2011 may see the return of investors, if you can get a mortgage that is.

Readers that are searching Internet for more information about the sphere of forex managed accounts, then please make sure to visit the page which was quoted right in this passage.