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'Buy to Let' investments can be a very lucrative market for investors, as the property is financed by the tenants. Property prices may at times fall in difficult markets, but the long-term prospects are generally always positive. Property investors are now looking at other countries, especially holiday destinations where higher rents can be achieved.
The main reason for this lies in the fact that in holiday destinations the landlords do not look for long term lets (12 months contracts) but rather short terms holiday lets (per week or even per day). Short term lets tend to achieve much higher rental rates than longer term rental rates.
Main benefits of Buy to Let:
The investment property can generally be used by the landlord throughout the year giving a level of flexibility on personal use. More and more tourists realise that renting is more affordable in holiday destinations than staying in a hotel. Also the qualities of the rental properties are identical if not superior to hotels. Self-Catering apartments have grown in popularity especially for those holiday makers working to set budgets. There is a possibility to rent out the property 52 weeks of the year although this is not always the case. Realistically, in the first year, a property will be rented out on average 18 - 20 weeks a year. In the years following this can be greatly increased through word of mouth and correct advertising and marketing. As a pure 'buy to let' investment it is best to go for an apartment in a community with swimming pools, gym, tropical gardens, amenities and, if possible, golf. Compared to a villa, the outlay and the running costs are a lot less. In communities the gardens and communal areas are looked after through the service charge and there is no need to hire a gardener. Communities are also very secure, usually with a 24 hour porter at the entrance.
Different types of Buy to Let: Guaranteed Rental: This is for investors who are looking for a minimum risk and no hassle investment. The landlord can use the property (weeks TBA with agency), the rest of the year a lettings agency manages and looks after the property. (We currently have investments that can achieve up to a 7% Guaranteed Return) Pooled Rental: Some developments will have rental companies which operate on a pooled basis. This works as follows: if 10 owners give their property to the letting agency for 1 week and the letting agency rents out 2 properties in that week, every owner receives 1/5 of the income. This is a very interesting scheme as the owner of an apartment in the community can use their own advertising and marketing to rent out their property as well as using that of the rental / management company already in place. Their will also be a number of weeks free usage usually built into a pooled rental scheme giving owners flexibility of personal usage through the year. Weeks in peak seasons can be restricted however this will generally lead to higher rental yields for all those involved in the rental pool.
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