Buy-to-Let: How much should I pay for my property?

Going against the wider signs of economic recovery, property asking prices have fallen for the first time in many years. For people looking to make a long term investment, these lower prices may look like the perfect point at which to enter the buy-to-let market.

Successful property investment is more than simply identifying a property you can afford. Numerous factors define whether a property will yield a healthy return:

Location – Some properties are cheaper because they are located in less than desirable areas. Finding a paying tenant may be as hard as finding another buyer when you decide to sell up.

Local rents – Regardless of the property, most regions have upper rent limits. You need to be sure that your mortgage payments on the property are no more than the rent your tenant pays. Ideally you probably want a little more rent to cover the cost of maintaining the property during the tenancy.

The future – Some less popular areas may be ripe for urban regeneration. If you can identify a property in an up-and-coming area, it should increase significantly in value over time.

These factors make buy-to-let property investment difficult to get right. It also means that every potential property has a different “correct” value. Any novice buy-to-let investor should seek professional advice as to how best to invest their money.