Work out the finances
This should be the first step whether you’re buying in Edinburgh or El Paso. Before you think about buying a home, it is imperative to have your finances in order so you know your maximum budget – and this includes mortgage arrangement fees as well as legal fees; there are a number of charges and one off fees all buyers should be aware of before any property search. At Grant Property, we look after this aspect for our clients, however there are a variety of guides online for those going it alone which are an invaluable resource. And, where possible, always agree any costs up front to avoid nasty surprises.
Arrange a mortgage in principal
Having a mortgage in principal set up makes you a more attractive buyer and offers more negotiating power so it’s worth setting up an agreement with a lender ahead of looking for a property. Shop around too of course; it’s rare to get the best deal from the first broker you approach. The buy-to-let market is booming just now with new lenders popping up all the time and the average deposit required is around 20%. In the first quarter of 2013, the buy-to-let market burst into life when lending to landlords reached £4.2bn across 33,500 loans, according to the Council of Mortgage Lenders (CML). By the end of March, it accounted for nearly 14% of total mortgage lending in the UK, representing a 13% increase from the last quarter of 2012.
Put the time and do your research
Buying a residential property anywhere is a significant investment but, in a historic city like Edinburgh, where property commands a premium and prices are on the rise, it pays to do your research before buying a home. As with any investment, you need to be careful where you put your money. It’s crucial to do your research and find the right property in the right area to maximise your return. And it must have the ‘rentability’ factor, commanding both a strong rent and, importantly, a high occupancy.
Be prepared to move fast if you have to
In the UK, residential property continues to outperform all other asset classes over whatever period you measure. House prices in the UK have a low volatility when compared to stocks and commercial property, and it is a buyer’s market because of restricted mortgage lending.
At Grant Property, we witnessed a 22% increase in buy-to-let property sales from January to June 2013, compared with the same period in 2012. In January alone, we saw a 50% rise on last year, with a 60% increase in March and April.
Buyer confidence is back – so you need to be prepared to move fast if you want the right property…especially in Scotland’s Capital city. The Edinburgh property market is buoyant and competitive so if you see somewhere that looks perfect for you the chances are it’s perfect for someone else too. With this in mind, be ready to snap up a bargain if you see one. It’s worth setting up alerts with property sites so you can keep up to date with what’s on the market in your preferred areas.
There’s nothing wrong with taking on a project
If you’ve got the time and money, there’s nothing wrong with taking on a property that requires renovation. In fact, to maximise our clients’ investments, we always look for properties that need a makeover as this often yields a better return on investment. At Grant Property, we even manage the renovation works. If you’re able to bring a property up to a really high standard you can see a significant return on your investment when you come to rent it out or sell. In a city such as Edinburgh, you can expect to see around 6%- 7% return on your money.
Location, location, location
One of the most important things to get right as an investor is location; buying the right location is key. At Grant Property, our job is to source properties, renovate, furnish and rent them for our clients and we always focus on higher performing traditional Georgian and Victorian properties to maximise return on investment. But location is just as important. Being close to universities and aspirational areas such as the city centre, Marchmont, Newington, Bruntsfield and Morningside will be more desirable both in the short and long term. Transport links and shopping centres should be considered too.
It’s also important to look at the rent-ability or re-saleability of your potential purchase to ensure it’s a sound investment. I would always advise my clients to opt for traditional properties and look for fine period features. Original fireplaces, cornicing, high ceilings, floorboards all create impact.
View, view, view
If the property is to live in as opposed to let out, it is also important to visit the property (and surrounding area) a number of times at a different points in the day. Take a wander around local pubs and parks and make sure you’re comfortable with your surroundings. If you’re not happy in the local pub at three in the afternoon, chances are you’re not going to be happy living next to it for the next ten years. When we are sourcing properties for our clients, we take all these factors into consideration as it will affect your rental yield and also, ultimately, your investment.
Treat any viewing like an inspection
It’s crucial to buy well, without compromising on the above. Always bear in mind that you are there first and foremost to check for flaws that can come back to haunt you down the road. With that in mind, it’s a good idea to get a decent survey carried out and use the professionals to inspect the roof / draw up plans. It pays in the long run to have all due diligence carried out up front.
Be flexible with your offer
In the current market you can afford to go in low, but not too low. Give yourself a bit of room for manoeuvre with regards to your offer, be prepared to give a bit more but don’t be afraid to chance your arm and get a bargain either.
Ask for the property to be taken off the market
Once you’ve agreed a sale, ask for the property to be taken off the market. This will reduce the chance of another bidder coming in higher than you once your offer has been accepted. That said, there are no guarantees and either of you can pull out until you’ve signed dotted line.
Grant Property Investment is one of the UK’s top property investment and management companies and is ARLA accredited. For more information visit www.grantpropertyinvestment.com