At Hawkhurst Invest, we work with both new and seasoned investors.
At a recent seminar of ours, a spectator asked a very good question, so we thought we would share this in addition to some points for you to consider today:
Q: “Is it best to buy a new build property or an existing / older property when it comes to buy to let investing?”
The short answer is that both options can be good for investment. However, for those less experienced in property investment, or those who are investing as a second business or alongside their job, then most investors we work with, typically look at new build investment opportunities and there are many reasons for this.
Whilst an existing property, often one of 20 to 60 years of age or more can be attractive in terms of appealing prices and potentially good yields, ‘on paper’, there are many factors to assess when considering to buy an older property.
Some of the unexpected cost headings that can come with buying an existing / older property can include:
- Often less desirable tenants
- Potential structural issues with the building
- Usually more aesthetic issues with the property
- Mechanical problems with essential components
- Unforeseen costs with small issues
- Unforeseen costs with big issues – unfortunately all too often
- Greater expenses than expected
- Delays in buying an additional buy to let due to wasted cash
In addition to all of those points, these commonly found costs with an older property can kill your anticipated yield.
Furthermore, people tend not to finance or be able to finance the additional costs incurred with fixing an older property, consequently, an investors cash is therefore ploughed into the property and this places the investor further away from buying another buy to let property.
As we know, cash is king, particularly when it comes to buy to let as most lenders will need you to put a minimum of 25% into the deal.
Lastly, as experienced investors will often tell you, being able to gear with the use of a mortgage makes even more sense to look at properties with little to ideally no work to do.
Subsequently, new build properties with a 10-year NHBC warranty are usually snapped up by investors.
New properties come with greater desirability from tenants and usually much lower costs throughout the first 10 years in particular.
This is why most of our investors tend to choose and opt for newly built property acquisitions.
We hope this information proves useful and if you are involved in or want to get in property investment, then feel free to give us a call on 01245 947 797 or email email@example.com
Our team are happy to answer any questions over the phone or we can meet at your home or our offices.
We look forward to hearing from you.