Finance · 11 May 2021

Eight common BTL investment mistakes to avoid

Eight Common BTL Investment Mistakes to Avoid

No buy-to-let investment decision should be made without first carefully considering the risks. This is by far the single biggest and most common mistake made by newcomers to the BTL market.

Aside from this, there are several additional errors and oversights mortgage brokers encounter more often than others, when working with clients interested in BTL investments. While there is no such thing as a risk-free BTL investment opportunity, avoiding these mistakes at all costs can pave the way for a successful purchase.

  1. Being misled by unrealistic figures

Developers and agents are often guilty of attempting to blindside BTL investors with unrealistic indications of potential yields. Where the average yield on property may be 6%, it is not uncommon for potential yields of up to 12% to be quoted. If it seems too good to be true, it almost certainly is.

  1. Banking on overnight success

BTL never has been and never will be an effective get-rich-quick scheme. Nor is it something that can be entered into without plenty of capital, or a meticulous eye for how the market is performing at the time.

  1. Guarantees

BTL investors should never be misled by apparent ‘guarantees’ on the part of developers, agents and sellers. There is no such thing as a guaranteed rent or return on the BTL landscape, which is why the term is regulated by the FCA but continues to be widely used (and misused).

  1. Not having a strategy in mind

A surprising proportion of those who get into BTL investments for the first time have no specific long-term goals or strategy in mind. They simply purchase properties to let out with the intention of making it up as they go along, which almost always proves counterproductive long-term.

  1. Banking on short-term gains


 
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