Is clever buying the way to better returns?

Generally speaking, it used to be relatively easy to make a profit as a landlord, but we all know it’s getting harder. A combination of Government policies and inflation have eaten into returns, whilst wage stagnation has limited the potential for growth in rental values.

If there is less room for managing the costs and income from an existing part of a portfolio, perhaps it’s better to focus on earning from capital appreciation on a new purchase. Although property price growth has slowed, there remain parts of the country where demand is pushing values upwards faster than the average. A bit of savvy purchasing in such regions could deliver better results than trying to push up monthly rents in an area where tenants have plenty of opportunities to pick and choose.

It may be simpler to purchase a ready-to-let new build, but those landlords with the eye for a fixer-upper in an upcoming area could make a big difference to their overall yield, even given recent changes to Stamp Duty for buy-to-let properties.

Yes, you might have more short-term stress. You’ll need more skills or contacts who can help you transform a run-down property into something that’s a viable and attractive rental proposition, but it could be the smarter way to go.

Being a landlord is getting to be more of a challenge, there’s no doubt about that, but rising to the challenge and learning how to beat the system can be very rewarding, and not just in terms of the finances.

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