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Investing in a buy-to-let property for sale is a great way to generate an impressive ROI; particularly if you buy in the right area. For example, if you invest in a property in Sheffield, Manchester, Glasgow or Liverpool right now, rental yields are high, which would mean a steady income to pay off the mortgage. Rising prices would also mean solid capital growth in the future – which translates as even more profit.

However, getting started can be tricky, especially if you don’t have a deposit in place. Here’s more information.

Why is a Deposit So Important?

If you want to invest in UK property for rental purposes, you’ll need a specialist buy-to-let mortgages; and the general rule is that you’ll need some form of deposit to be accepted by lenders – normally a higher amount than a standard mortgage.

There’s no hard-and-fast amount, but on average, most people tend to put down a deposit that’s equal to 25% of the property’s value.

Doesn’t This Price Me Out of the Market?

Not necessarily! If, for example, you started off with a £70,000 flat, you’d require £17,500 to start off with, plus extra for insurance, mortgage fees etc. That’s not as difficult to achieve as you might think, providing you’re willing to put in the legwork beforehand.

Ways to Raise Money for a Deposit

  • Move back into your parents’ house. A vaguely depressing thought perhaps, but a very easy way to save money, especially if you’re paying out a lot each month on rent. Many homebuyers have adopted this strategy, and end up saving thousands each year. It soon adds up.

 

  • Get a lodger. If you already own your own home, getting a lodger is a great way to generate extra cash. Again, we appreciate this isn’t the ideal solution – but if you’re serious about making enough money to purchase a buy-to-let property for sale, this is an effective way to go about it.

 

  • Buy with someone else. Many savvy investors are buddying up with other people to buy as a group, rather than alone. Of course, while your deposit is slashed, your profits will also be reduced, but it might be the best way for you to get started.

 

  • Ask for a loan. Ideally, if you can get a family member to help you out, this is the most risk-free way to go about it. However, if you’re really confident that your buy-to-let property will turn a profit, you may be able to get funding from business angels, or even from the bank.

 

  • Cut unnecessary spending. It’s amazing how much you can save if you’re prepared to live frugally. For example, just swapping your daily lunchtime sandwich from a fancy shop for a homemade version can save you around ten pounds a week. Over the course of a year, that’s over £500 – just from sandwich swapping alone!

The Buy2Let Shop

If you’re interested in learning more about property investment in the UK, you’re welcome to attend one of The Buy2Let Shop’s free property seminars in London. It’s a great chance to ask questions, talk to fellow investors, and get the lowdown on what’s involved with being a landlord.

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