Whether you’re a new investor or are looking to expand your buy-to-let property portfolio, the first thing you’ll have to decide is whether to choose to invest in a student or professional (also called ‘residential’) buy-to-let. This decision is one of the most important ones you will have to make when buying a property. The differences between these types of properties can be subtle but can have a big impact on your property investment.
There are various advantages to investing in a student buy-to-let property. The UK’s student population is continuously increasing so you are nearly guaranteed constant tenancies. In order to rent properties students are required to provide a guarantor, which ensures rents are paid on time and in full.
Investments in these kinds of properties often require a smaller initial outlay so are great for first-time investors who want to test the water before expanding their portfolio. This lower investment level also helps to create a diverse portfolio by spreading their money across multiple properties.
The kinds of properties typically in demand from students are those near universities or the city centre. HMOs are very popular as students prefer to live with their friends for the duration of their studies.
There are some disadvantages to investing in a student buy-to-let. Wear-and-tear on the property can be higher due to students’ occasional irresponsible behaviour and lack of life skills. Similarly, disruptive behaviour and late-night parties can cause complaints from neighbours.
Due to the nature of university terms, the letting period can be short-lived. If you miss it, you run the risk of having an empty property for a year.
Renting to young professionals and families is another great choice for property investors. These kinds of tenants have bigger budgets to spend on higher rents and better quality housing. Although they are no less likely to enjoy a party, their greater disposable income means they are more likely to go out and enjoy themselves. They generally tend to have more respect for a property and will leave it in a better state than students will.
Investors interested in these types of tenants can still benefit from investing in HMOs. Young professionals especially are more likely to want to retain the communal aspect of student living and opt for HMOs.
As with student tenants, there are some disadvantages to renting to professionals. This group has higher expectations of the properties they’re renting. So you’ll need to ensure it’s finished to a high spec with quality appliances and contemporary design.
These kinds of properties can also experience a high turnover of tenants. Tenancy periods often reflect employment contracts, which can be anything from 3 to 6 months. This can cause additional stress of having to frequently find new tenants.
If you’re still not sure whether a student or professional buy-to-let is right for you, contact the property experts at North Property Group and they’ll help you make the right choice.
If you’ve already made your decision get in touch with North Property Group to find out what investment opportunities they currently have available.