Are Buy To Let Properties A Good Investment? Here’s A Hint: Yes!

by Mike on March 14, 2017

Are Buy To Let Properties A Good Investment? Here’s A Hint: Yes!

Real estate is the best way to make a little extra money for most people because it is low risk and high reward. With a few handy changes and the right realtor, it is possible to flip a property and secure a good return on investment. As a result, though, real estate is now full of people trying to get rich quick, and it’s damaging the market for the average investor as prices increase. What this means for guys like you is that your chances of making it big are slowly diminishing unless you can find an alternative.

Luckily for those of you with dollar signs in your eyes, there is another way, and it’s called buy to let. A buy to let scheme, as the name suggests, involves properties which are available for rent only and not up for sale. Why is this asset a better choice than traditional real estate? Continue reading to find out.

Less Competition

As the rat race wages on in the form of a traditional investment, buy to let properties are waiting in the cold. Ok, so there are people that are willing to take a chance, which means there is some competition. However, the rivalry is nowhere as fierce with a buy to let scheme. In fact, people are scared of them because they think they lower their chances of a big return on their investment. The myth of a small ROI couldn’t be further from the truth as letting properties provide a steady flow of cash for a prolonged amount of time. The fact is that an entrepreneur can make a killing if they know the tricks of the trade because they can get involved on the ground floor. Any killer investment always starts off with bright people spotting an opening where others can’t see one.

Not As Much Stress

Most properties need a lot of work before they go on the market, but that isn’t the case in this scenario. Buy to lets are almost always in use, such is the demand from renters, so they are usually liveable. As a result, there is no need to spend time worrying about when someone can move in and when you can make money on your investment. Hopefully, you’ll be able to do this from the beginning. Another reason your stress levels won’t go through the roof is the tenants. They are already living on the property, so there is no need to find a suitable candidate to move in. Finding tenants is a notoriously stressful and nasty business, and it doesn’t always go to plan. It’s better for your health to invest in a property with occupants than one without residents.

High Demand

The current housing situation is not a healthy one for first-time buyers as prices are skyrocketing. Not that you want to revel in their misery, but this is good news from an investment point of view. In basic terms, the majority of first-time buyers can’t afford a mortgage to get on the property ladder. So, instead of buying, they rent. The demand for houses for rent today is much higher than in the past because of the market. The market is pricing buyers out, which means they have to turn to landlords who are willing to rent until they can afford to move. If you are such a landlord, the demand for property will go through the roof. For the unscrupulous among you, that means it is possible to fill the vacancy and drive up the price to recoup more money.

Won’t Get Rich Quick

Don’t get it wrong; buy to let properties aren’t get rich quick schemes. The reality is that you’ll have to wait a while to start making a profit, but that isn’t always a bad thing. Everyone wants a quick turnaround, and they will do anything to make it happen. The problem with a quick sale is that it induces bad decisions. There is so much to consider that you can’t afford to make quick decisions which affect the future as you might have to live with them for years. The best way to invest is to take your time and play a game of patience as these are the most profitable projects. Entrepreneurs that make a killing have a lot of different irons in the fire, and they keep them there for a long time. Why? It’s because they understand the real estate market is volatile, something which you should always bear in mind. Everyone wants to get rich quick, but you need to invest time as well as money to get rich.

Steady Flow Of Cash

Occupants pay the rent every month, and every month the money goes into your bank account for the duration of the tenancy. Although it sounds boring, it’s pretty exciting because it means the money will always roll through the door. When you invest in a buy to let, you will have a considerable sum of money supplementing your income for the foreseeable future. The money might not make you rich straight away because there are bills to pay, but it is always there as a safety net. Problems happen in life, and people have to find large amounts in a short space of time. It might be an issue for most people, but it won’t be a problem for you thanks to your investment. Sure, the property might not be full of tenants, but if you can find a steady stream of renters, you’ll get a steady stream of money.

Volatile Market

The term ‘volatile’ never sounds like a good thing, yet it is good when it comes to real estate. Maybe ‘good’ is the wrong word. A better word is ‘opportunity’ because that is what a volatile market gives to an investor with courage. You will often hear people talk about how you need to be brave to make money, and it’s true. What the best entrepreneurs do perfectly is they spot the opportunity, but they also take the shot even if everything isn’t perfect. You see, they know that the risk is worth the reward, and they’re willing to bend the market to their will. A volatile market often scares people off, yet it might be the perfect time to invest as prices will be lower and incentives higher. Anyone that doesn’t think this is true just needs to take a look at people like Michael Burry and Steve Eisman. Burry and Eisman were two of the people to make a huge return on the subprime mortgage crisis because they understood and acted swiftly. Whereas massive corporations went bust, they went boom.

There’s Always A Backup Plan

When you buy a house, there is always a way to protect your investment – sell it to another bidder. Of course, it isn’t always as easy as this because the market might go stale. However, there is typically someone that is willing to take the gamble because of the possible benefits. If you can get rid of the property for the money you paid for it, you can use the money to pay off the bank and break even. In fact, you won’t need the asking price if you previously used the rent to pay off the mortgage as the total amount will be lower. Or, if you have the stones, you can wait until the market picks up before selling it on and covering your losses. With property, there is always another way, which isn’t the same for most investments.

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