HALF THE BATTLE in property is knowing what makes a good investment, the other half is in knowing how to find the very best buy to let deals…
Here I will share with you how to do both.
Finding The Very Best Buy To Let Deals
Why do criminals rob banks….? Because that’s where the money is…!
Well, many investors and even ‘Experts’ assume the same mentality (no I don’t mean robbing banks).
They follow the crowd when it comes to finding their buy to let investments. They head to Estate Agents and Auctions….
because that’s where the properties are…!
Now i’m not knocking them, you can find great deals here (and even pick up some repossession bargains), but let’s think about this logically. I bet this is the first place you would look to buy a property right?
Well… so does 99% of other buyers…and herein lies the problem because this is where the competition is.
As in any business, where there is a lot of demand, there’s a lot of competition, and this drives prices up and means investors can find themselves overpaying.
The trick is to buy at a discount. So to get the very best buy to let deals you sometimes need to observe the masses and do the opposite. You need to have as many angles as possible and this involves thinking outside of the box.
There are thousands of properties sold every year that don’t even hit the market and get as far as the estate agents and the auction houses…
And these are the vendors you need to be speaking to…
So how do you find these deals?
- Vendors that choose to sell via estate agents do so to get the best possible price…
- Vendors that choose to sell direct do so to get the quickest possible sale…
Think about that for a second…
If you were selling your property and time wasn’t an issue you would go to your local estate agent right?
Well what about if you had to sell in 6 weeks… or even 4 weeks… Where would you turn then?
These sellers simply don’t go to their estate agents because they know the average sale could take them months. They need to sell and they need to sell quick, so they try and take the sale into their own hands.
They look to contact adverts in their local paper, go to Google and type in ‘sell my home quick’ or they even respond to the big yellow leaflet that’s just dropped through their door from a ‘local investor’.
So if you want sellers that are motivated, and want… no NEED…. to sell quick. Then this is where you need to be.
Be proactive, get your name out there and get vendors contacting you first, and you will be picking up the very best buy to let deals for property investments in your area.
Sourcing Quick Tips
But if you want a few cheats to get you started and give you the upper hand on most experts in your area then take a look at these websites.
> Property Bee is a great little tool that shows you when details change on a property listing on sites like Rightmove when your using the firefox web browser.
This way you can keep track on when an agent changes the price and even description, and you can then spot which sellers are getting twitchy and need to start selling quickly.
> Google Chrome Property Tracker Add-On is similar to Property Bee but works for the Google Chrome web browser, so however you use Rightmove, this tools can help.
What Makes An Exceptional Buy To Let Deal
Hopefully now you’ve found your ‘potential’ of properties, how do you know which of these will make exceptional deals?
One of the most important aspects to consider is the rental yield.
A low rental yield could mean you’re subsidising the property….. not good!
Personally I only look for rental yields of 8%+ for my properties, and when I am sourcing for clients
This is so there is enough income in each property to cover mortgage costs, maintenance, void periods and other miscellaneous expenses…. AND still make a profit.
To calculate the rental yield it is simply….
One years rental income ÷ the purchase price of the property × 100 = The Rental Yield %
So let’s say you have a property that costs you £75,000 to buy, and is ready to let (i.e.: no refurbishment is required), and the monthly rent is £500 per month.
The yearly rent is therefore £6,000… so the calculation would be
£6,000 ÷ £75,000 = 0.08 x 100 = 8% Rental Yield
Do this calculation for each property, and you will quickly know if it would work as a buy to let and if the rental yield is high enough for you.
Remember 8%+ rental yields should give you some solid buy to let deals, especially when you consider this article by the telegraph has a headline about ‘blinding returns’ on buy to lets at only 5.9%….
You Make Your Money When You Buy
So you’ve found a property with a cracking rental yield, what next…..
Smart investors make their money when they buy.
If you overpay for a property it’s going to take you a while to make it back, but buy at a discount and your locking in equity from day one AND giving yourself a buffer incase property prices change.
So what discount should you look for to get the best buy to let deals?
If I was to take a poll of all of my investor contacts on what discounts they look for, I guarantee you it would be between 15-25%
I know this because I’ve done it!
Regardless of their situation, what their aims are and the area they are based in, the answer always comes back the same.
This is the discount smart investors look for, because they realise they’re not going to buy great properties for pennies, but they know by only dealing with motivated sellers, they hold the cards and can negotiate well.
So remember dealing with Motivated Sellers, looking for a solid 8%+ rental yield and sourcing properties from all avenues, is the key to finding the very best buy to let deals and growing a profitable portfolio.
It would be great to hear your thoughts, so let me know what discounts and rental yields you look for in your residential property investments?
….in the comments at the bottom of the page