Buy-to-let success: 6 top tips for Liverpool City Region landlords

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Are you venturing into the buy-to-let market for the first time or looking to grow your portfolio into a thriving property business? According to expert Bernadette McDonald, senior partner and founder of Liverpool-based BMD Law, formulating a strategy early on and sticking to it is the key to success. She shares some top tips with Your Move. 

Your portfolio vision

Setting out your portfolio’s focus early on and having a clear strategy could help you to ensure you reap the maximum benefits from your venture.

“If portfolio building is the aim, will it all be residential, all commercial or a mixed portfolio?” says Bernadette McDonald. “There are advantages for each of these models.”

Behind the buying

Look at how you plan to buy property, taking into account the changes to rules and regulations in the wider sector.

“With changes such as mortgage interest relief and long-term benefits, a limited company should be considered,” explains Bernadette. “If there is other property in the portfolio already, it may be a benefit to move that into the limited company as well in order to free up capital or offer the security to build your portfolio quicker.”

Long-term sustainability 

Think of the future and how you’d like your property business to work in the long term, as your investments will need to fit in with these decisions.

“Decide what type of tenants will be your key market as this dictates property choices,” explains Bernadette.

“For example, key workers may prefer more modern homes which are closer to the city centre and are equipped with good facilities, whereas young families may want the opposite.”

It’s also important to establish the financial aim of your property business.

What kind of rental income you’re looking to generate and how will you achieve it?

For instance, are you looking to boost your cash flow with a regular return or is your goal to build up your pension pot for long-term security?

Setting out this strategy will also require you to think about the type of tenancies you’ll be looking to secure.

“Consider whether you mind a regular turnover of tenants or whether you really want a longer term tenant for security,” adds Bernadette.

Head over heart

“Always buy with your head and not your heart,” stresses Bernadette, warning that it’s important to stick to investing in properties that fit in with your chosen business model and portfolio aims no matter how attractive or sought-after they may appear.

“Does a property you’re looking to buy fit within your strategy or is it a shiny penny to distract you?” she adds. “If it doesn’t fit the strategy, can the strategy be amended or will the shiny penny cause an operational malfunction?”

Price vs Potential 

“If the aim is below market value, don’t forget that even without the perceived discount it may be possible to add value either for a long-term retention or a short-term flip,” says Bernadette, encouraging investors to explore the potential for a property to be a savvy purchase beyond its initial cost.

This could depend on the other elements of your portfolio strategy too, and whether ‘flipping’ for instance, which means buying a home to renovate and then sell on, fits in with your wider aims and strategy.

Exit strategy

Keep your end goal in mind as, according to Bernadette, if this changes then your portfolio strategy changes.

“Are you building a long-term portfolio or a 10-year portfolio with a plan to then cash out?” she says. “Funding and tax planning will then need to be considered in light of the end goal.”

For more information call BMD Law on 0151 722 8004 or log onto www.bmd-law.uk

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