How to 5X your property income in 2019
Be in it for the long-term
Long-term property investment is still set to deliver significant returns for landlords over a 25-year period, despite recent regulatory and taxation changes by the government. That’s according to detailed analysis by Kent Reliance, the specialist mortgage lender and part of OneSavings Bank. Analysis shows that a typical landlord will see an estimated net profit of over £265,500 per property over the next 25 years, through rental income and capital gains. In today’s money, that’s £162,000, or nearly £6,500 per property per year. Returns vary significantly across regions, with profits estimated to reach over £307,000 in London in today’s money, amounting to almost £12,500 per annum.
Invest in up and coming areas
Good transport links, excellent local schools, close to amenities; these are just some of the main factors to consider when buying a buy-to-let property. Wherever you’re looking to invest, always research the market thoroughly to see how much similar properties sell for in the surrounding area. Repolist is a good place to start. At the end of 2018, LendInvest, the UK’s leading marketplace platform for mortgages, released its latest Buy-to-Let Index report, compiled using data from the Land Registry and Zoopla. It ranks English and Welsh postcodes based on the key metrics of rental yield, capital gains, rental price growth and transaction volume growth. Based on these factors, the top 10 buy-to-let hotspots for 2019 are:
Build on your property portfolio
If you already own one property, make 2019 the year you invest in rental property number two. Using the equity from your first buy-to-let is an effective way to build your property empire and realise increased buy-to-let profits this year. A portfolio of between five to ten properties will replace an average annual income, and the long-term capital gains can be significant. However, changes to buy-to-let financing may mean you have to work harder to find a good mortgage deal – talk to your financial advisor who will suggest the best way forward.
Consider HMOs rather than single-let properties
If you have the funds and resources to change a property from a single-let to renting out four or five separate rooms, annual yields and income will vastly increase over time. There will be extra costs involved in converting the property and adding things like fire doors, extra bathrooms and alarm systems, but with the potential to increase yields by 12-15% per annum, it’s an attractive option that’s worth considering in 2019. With a huge housing shortage and many young professionals not able to rent property on their own due to high rental costs, HMOs are growing in popularity and present an excellent business opportunity for savvy landlords. With the properties likely to increase in value over time, they make a safe long-term investment.
Many property commentators believe rent-to-rent is the next big property trend, a quick route to making increased passive income from tenants. But what is it? Simply put, you rent a property from a landlord then rent it out again to a tenant on a room-by-room basis for an increased rental price. The original landlord gets a fair monthly rental income, you get the extra rent from each of your tenants. Many investors talk of increasing their income by over £1,000 per property per month, but it’s not without its problems. So, for example, you could rent a four bedroom house from a landlord and convert the lounge into an extra bedroom, meaning you have five rooms to rent our separately. After costs, it’s possible that you could more than double your profits using this model.
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