Whats makes the perfect Southampton buy 2 let property?

One of the questions I consistently get asked by Landlords is what makes a good buy to let in the Southampton Property Market, well as you would imagine there are a lot of factors to consider:

-         What are your investment goals and time frame; short or long term? And is capital growth more important than monthly rental income?

-         Your budget, freehold houses will be c£150k+ so if your budget is less it will be leasehold flats

-         A successful buy to let needs to be in an area of high rental demand, in Southampton we would draw that area with three reference points namely the General Hospital, Southampton University and the Red Funnel Terminal in the City core. Clearly each corner brings a different tenant pool, but demand will be strong. But some areas are street specific and even block specific on certain streets!

-         Move outside this area too much and your voids will be bigger and your overall return lower. Clearly there is a good market to the east of the Itchen and I can discuss that in another issue.

-         Size is everything. A 1 bed flat at 330 sq.ft will only be taken by someone who needs accommodation now and it will be a short let, they will not renew – there will be no storage for a vacuum cleaner, ironing board or the dirty laundry basket. People often say don’t get emotional with buy to let property and I agree when it comes to running the numbers, but when you look at the interior do get involved – could I live her, would my son or daughter like to live here? If the answer is no, your tenants aren’t going to like it either! – keep looking.

-         For apartments have a hard look at the common areas, are they clean and tidy, are bikes and rubbish left in the corridors? Service charge can really damage your return and limit capital growth – we like to see it less than 1.5 times monthly rental income. Also take note of who the block management company is, there are really good ones and some not so!

-          Don’t forget parking (off or on road), ensuites, balconies and gardens. They do impact your rental levels, quality of tenant and length of lease.

-          When you run your numbers do allow for some voids and maintenance cost. Having some debt on your buy to let investment will make you cash input work harder and will increase your return on investment. But where interest rates are at the moment I would definitely chat to your advisor about fixing your mortgage rate and locking in that cost.

So what is the ideal buy to let in the Southampton market, well I would go for a 2 bed terrace house with an upstairs bathroom, nice garden and off road parking. It will rent for £900pcm and should give a Gross Yield of c5.75%, but believe me they are hard to get!