Where is the best place in Burton and Derby to purchase a BTL
Before investing in property you must consider what sort of investor you are, this will help to determine how you invest your money.
What Sort of Investor are you?
Before investing in property you must consider what sort of investor you are. Knowing the type of investment you want, you will be able to work out what type of property you should purchase.
Here are 8 questions to get you started:
· Are you a high risk or low risk investor?
· Are you seeking capital appreciation or income?
· If capital, do you want it immediately or in the long term?
· If you are looking for Income, do you want high income “active” income or medium income “passive”?
· What money do you have available now?
· Are you and experienced DIY person or do you have contact in the trade?
· Do you want to build a portfolio that will be self funding?
· Do you already have properties that you want to now form part of your portfolio?
Why Buy To Let
There are 4 ways to make money…
- Employed (active)
- Self Employed (active)
- Business (active)
- Investments (passive and active)
We all usually start out by finding a way to make money , we get a job and start to “make money”.
But the rich then find ways to make “money” work for them.
Robert Kyosaki (author of top selling Rich Dad Poor Dad) says “develop your assets before your liabilities, your home is a liability, it will always cost you money and never return you money. Buy your assets first then when you have enough of these you can use your assets to buy your liabilities, i.e. your home, cars and holidays”
He goes on to say “when we start earning where most of us go wrong is that we spend first and then save what we have left, what we should be doing is saving (investing) first and then spending what’s left instead”
Dolf De Roos Top international property investor and author claims - “Property is a phenomenally lucrative and astoundingly simple investment vehicle, especially when you can purchase using almost entirely someone else’s money!”
Property is one of only two type of investment that can be truly “passive” and the richest people in the world will have investments in both shares and property.
Shares are an option if you understand them – many don’t and they can’t be leveraged, you have to have the money to invest in the first place.
Capital Growth vs Rental Property Yield
There are two ways you can make money is a property investor, 1) Capital Growth and 2) Rental Property Yield. To understand which might be better for you we have broken them down below:
1) Capital Growth – Capital growth, or capital appreciation, is an increase in the value of an asset or investment over time. Capital growth is measured by the difference between the current value, or market value, of an asset or investment and its purchase price, or the value of the asset or investment at the time it was acquired.
The extent of capital growth that's favourable depends on the investor involved and the investment objectives. The investment objective varies among investors, depending on their level of risk tolerance. Investors with low-risk tolerance are likely to seek income, while investors with high-risk tolerance are likely to seek capital growth.
Many investors will use a “Buy and Hold” strategy, purchasing a property for 5, 10 or 20+ years to allow the asset to appreciate in value over time.
Below shows the percentage change in average house price in the Burton and Derby Area over the last 5 years.
2) Rental Property Yield – Rental property yield is the return a property investor is likely to achieve on a property through rent. It is a percentage figure, calculated by taking the yearly rental income of a property and dividing by the total amount invested in the property.
Calculating the net yield gives a true figure as it takes in to consideration the annual expenses involved. For example, repair costs, taxes, landlord insurance, agent fess, lease costs etc.
Using our “How to Easily Analyse Purchasing a BTL” worksheet will help to calculate the net yield and along with your cash on cash return.
Below is the average summary of the rental prices in Burton and Derby.
If you would like more information on purchasing a BTL, please get in touch with us using the "Get in Touch" with us on this page.
