Research from Platinum Property Partners (PPP) shows a quarter of buy-to-let investors sought no advice and carried out no research before making their property purchases. Only 18% of investors said they had conducted a lot of research.
Indeed, only 7% did any of the following: sought advice from experienced investors, consulted lawyers or accountants, and consulted a book written by an expert. Such inadequate planning and preparation will have significant ramifications on the investment potential of each buy-to-let property, PPP warned.
Steve Bolton, founder and chairman of Platinum Property Partners, said: “As with any investment, extensive research and planning for buy-to-let investors is paramount. It is astounding how little thought and preparation many investors are giving before diving in and making such a substantial investment decision. Neglecting to spend a reasonable amount of time and energy to devise a strategy for your buy-to-let investment can prove costly.
“Research and advice is essential to help pinpoint the right type of property and identify the right locations to maximise income and in fact, whether this type of investment is right for you.
“It’s crucial that choices are made that reflect an individual’s own unique circumstances and goals, and are appropriate for the amount of investable capital available. We would therefore urge prospective investors to exhaust the plethora of resources available and consult experts before they make any hasty decisions.”
According to the Office of National Statistics (ONS), the average buy-to-let investor in the UK currently has a property portfolio of £650,000, while recent PPP research shows investors achieve an average gross yield of 5.6%. If £650,000 was invested in property today and a consistent yield of 5.6% was achieved over fifteen years, a typical period to consider a property investment, then the investment would be worth in excess of £1.63 million by 2029.
But, PPP said that if the average investor increased their yield by just 1% – which could potentially be achieved by conducting thorough research on property location, seeking advice about income potential and reducing costs – the value of their investment would increase by £80,340 in the same fifteen year period through both income and capital growth.
Bolton said: “The fact that increasing one’s yield by a mere 1% can increase the value of an investment by over £80,000 in 15 years goes to show how far good preparation can go. Taking a lacklustre approach could mean investors miss out hugely in the long run.
“Of course, buy-to-let properties are not one-size fits all products. Property types, location and tenants all play a crucial role in determining the potential returns on offer and this is not to be understated. In fact this is precisely why research and advice is so key to unlocking the full investment potential for each property.”
