Is buy-to-let still a sound investment?

Is buy-to-let still a sound investment?
With little movement of interest rates and continuing drops in house prices will buy-to-let now be an investment vehicle of the past? With buy-to-let lenders tightening up their lending criteria, house prices continuing to fall and the general lack of confidence caused by the Northern Rock crisis I believe that experienced investors will still continue to buy rental stock, banking on long term capital gains. However first time landlords or landlords with smaller portfolios are finding it harder to fund new rental stock. For the well placed landlord that has the correct gearing on their portfolio it is still a time to hunt for the next opportunity! There will always be risks involved in any business or investment. For example your investment can rise or fall in value and property is clearly no different. You therefore just need to ensure that you minimise potential risks. In the past I’ve used several methods to minimise risk to my own investment portfolio. These include: Ensure the mortgage is between 80% - 85% of the property’s value. Every time your mortgage is due for renewal try to release equity. This ensures that your rent covers your operating payments and expenses. Start building a fund by putting this money to one side. Therefore if you have sudden repair bills or a vacant property you have money to fall back on. Always keep your property well maintained. If the rental market in your area suddenly changes pace the up together properties will rent much quicker. Always ensure you have a tenancy agreement in place, as this will protect you any your property. Widen the range of tenants you agree to let your property to. You may find that council tenants are able to top up rent monies by their own means, giving you the rent you have always achieved. Areas which attracts students also attracts higher rents. Wear and tear may be slightly higher, but at least the monthly repayments are being met. When increasing your portfolio look for properties that can add to the overall yield of your whole portfolio, ensuring your investments stay balanced. For example try to buy property in disrepair. Once renovated your equity should have increased, which in turn would increase your property portfolio’s yield. More recently overseas property investment has become a trend with investors searching for the next property hotspot to invest in. Things to consider when looking for your next investment whether here or abroad include: How easy is it to get to the property? Can you keep an eye on the property if it remains empty for a period of time? Will the property be let for the whole year or is the property’s location Summer or Winter orientated? Can you easily maintain the property yourself saving you the cost of employing trades people or does the rental income provide enough cash to pay for unforeseen repairs? Will the property’s location ever fall out of fashion with your intended tenants? Remember holiday hotspots change very quickly! Always ensure your investment has a steady stream of visitors. Even if the U.K buy-to-let is not as buoyant as it has been over the past decade the vehicle for investment is still sound. Ensure you put time into researching your potential investment and prepare yourself for long term capital gains. The online-lettings portal will soon allow for holiday lettings to be uploaded ensuring where ever you or your property is located tenants can always be found.Benjamin Perry CEO of online-lettings.co.uk The Specialist lettings website where you can <a href="http://www.online-lettings.co.uk">rent flats</a> or buy a <a href="http://www.online-lettings.co.uk">Tenancy Agreement</a>
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Business Personal Property Valuation
Business personal property (BPP) can be challenging to value because of the limited quantity of data available and primary reliance upon the sales comparison approach. Relatively speaking, a voluminous quantity of data is available when valuing real estate as opposed to valuing business personal property. Many real estate appraisals consider three approaches to value: cost approach, sales comparison approach and the income approach. By contrast, most business personal property appraisals depend primarily upon the sales comparison approach. While it is possible to develop a reasonable estimate of the market value for business personal property, the values tend to be more subjective than the value of real estate. The sales comparison approach depends upon principles of substitution and supply and demand. Purchasers of business personal property will seek alternatives and choose the alternative most beneficial for them considering cost, quantity and quality. For real estate, comparable sales data is available with in-depth descriptions of the real estate, including quantity and quality. For business personal property, is more difficult to obtain accurate information regarding the quantity and quality of property involved in a sale. For example, assume the XYZ Company recently closed its Chicago operation and sold the furniture, phone system, network servers, personal computers and related items for an office with 30,000 square feet of space and 120 employees. The sales data includes the quantity of desks, chairs, file cabinets, personal computers, network computers, etc. However, it does not contain precise information regarding the condition and age of each of these items. Real estate is more homogeneous and easier to describe versus the sale of a quantity of business personal property. Real estate appraisers often gain insight from preparing each of the three approaches to value for real estate assignments. However, personal property appraisers typically focused primarily upon the sales comparison approach. They do not have the benefit of contrasting the value conclusion via the sales comparison approach with values via the cost approach and income approach. It is important to define the asset being valued. Referring back to our example of the XYZ Company which closed its office, is the assignment to ascribe a value to each item as though it is going to be sold individually or is it to assign a value to the aggregate collection of furniture, computers and equipment? An alternate approach would be to define a value based upon selling subsets of the whole. For example, the furniture to one purchaser and the computers and phone system to a second purchaser. The definition of value also substantially affects the value conclusion. Market value would typically be defined as the value assuming both the buyer and seller are knowledgeable regarding the property, neither the buyer nor seller is under distress to buy or sell and an adequate amount of time is allowed to market the property. A liquidation value would also assume that both buyer and seller are knowledgeable regarding the assets. However, it would assume a very brief period of time to sell the property. Value in use describes the value of the assets to the current owner. It is not indicative of what a third party would likely pay to purchase the assets. In addition to performing an appraisal to estimate the market value of business personal property, other techniques sometimes considered for valuing business personal property are IRS depreciation schedules and appraisal district depreciation schedules. These may or may not result in a value conclusion that is similar to market value. However, it is the writer’s experience that they typically produce a value in excess of true market value. To obtain a quote or further information for a business personal property valuation, contact us at 713-686-9955 The appraisal division of O’Connor & Associates is a national provider of commercial property real estate appraisal services including cost segregation studies, highest and best use analysis, due diligence, gift tax valuation, commercial real estate appraisal, lease abstraction, insurance valuations, business personal property valuations, business purchase price allocations, single-family litigation support and business valuations.Patrick C. O'Connor has been president of O'Connor & Associates since 1983 and is a recipient of the prestigious MAI designation from the Appraisal Institute. He is also a registered senior property tax consultant in the state of Texas and has written numerous articles in state and national publications on reducing property taxes. He continues to set the standard in direction and quality of our appraisal products, adding services ranging from business valuations and business appraisals to cost segregation analysis for income tax reduction. Patrick C. O'Connor <a href = "http://www.poconnor.com">www.poconnor.com</a>
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