Is this a good time to get into the Burton Buy to let market?

The buy to let sector in Burton, in fact the whole of the East Midlands buy to let sector is doing very well at the moment, but it can be a minefield.

I could regale you with many stories where investors have got it tremendously wrong in Burton, like, for example, some modern apartments on the corner of Horninglow Road North and Wyggeston Street, that were sold for an eye watering £133,000 in 2008, only to be selling today for £75,500, a drop of over 43%.

It is interesting to note that at that time in 2008 for £133,000, you could have bought a lovely 3 bed semi in Stretton or a three bed detached house in Tutbury. A two bed apartment for the same price as a decent semi or nice modern detached house, doesn’t, in hindsight, quite stack up.  The thing is, I still see mistakes being made on a daily basis in Burton. With property, if you make even a small mistake, it could still prove to be very costly.

So what should you buy in Burton?

One option is Houses of Multiple Occupation (HMO’s). While they can be profitable, chiefly in the student market with Burton and South Derbyshire College's students, they can make things much more complex and costly, with the need for HMO licences etc. Mortgage rates on buy to let are really low at the moment and for the right property and person you can get rates below 3.9% if you put down a decent deposit of 25%, but the best rates are for deposits of 40% deposit and,  as I type this, you can get a 5 year fixed rate buy to let mortgage from the Post Office for 3.65%. Also, the deposit will ensure you have plenty of equity in the property, if the property market stagnates in the future.

The important thing to remember is the amount you can borrow is driven by the rental income, so it is vital you can identify a property with a decent yield that lets easily. This is where I can help!

Finally though, if are investing so much time and money in building wealth for you and your family, it is equally important for you to identify ways to protect it. Do not forget, if you spend years building a successful property empire in Burton, when you pop your clogs, your family could face an inheritance tax bill of 40%, which they would have to pay within six months of the death. In a buoyant market, selling in six months is not an issue, but what if the market was like it was in Burton between 2008 and 2012, when things took seasons to sell, not weeks. Quite apart from losing nearly half of the assets you built for your family to the tax man, if they had to sell some of your portfolio, possibly at a discount because the taxman wanted his money so quick, it might be wise to consider some life insurance that will offer protection against inheritance tax.

There are plenty of good advisors in Burton that can help you with the mortgages and life insurance. We aren’t one, because we are a letting agent and we stick to what we are great at, but what we can help with is choosing the right Burton property to buy. It’s in our interest to do so, because if we offer the best advice and opinion, without any conflict of trying to sell you anything, you might consider trusting us to manage the property.