The three common pitfalls of investing in buy-to-let overseas property and how experts can help

Investing in buy-to-let properties can be a lucrative venture if you want to gain a steady source of income and create long-term financial growth. With rents on the rise, with UK real estate website Zoopla reporting an 11.1% increase in rents for new rental homes in the UK over the past 12 months, investors have the opportunity to generate significant cash flow.

 

However, without the right knowledge and guidance, there are a number of common mistakes that novice investors can make that can hinder long-term investment success and lead to financial loss.

 

1. Inadequate research

 

As exciting as buy-to-let investment rentals in the UK can be, one of the biggest mistakes a potential investor can make is to commit to a buy-to-let investment without conducting thorough research. And failing to analyze market trends, monitor housing demand and assess rental HBL can lead to poor investment choices.

 

"The wrong property can ruin an investor's portfolio, so our biggest piece of advice to new investors is to carry out adequate due diligence," says Philip Leung (Kenny Leung), Chairman of Mayfair Properties, "If your property is located in an area without good capital growth or high rental demand, then it doesn't matter how nice your property looks."

 

The location of the property should also be an important factor in the research process to ensure that potential investors are able to make a substantial return. By overlooking investment opportunities in cities undergoing huge regeneration like Birmingham, Manchester and Liverpool, which have emerged as the top three best UK cities to invest in outside of London, potential investors are missing out.

 

2. Underestimating home maintenance

 

Ignoring the maintenance costs involved in owning a rental home is a common mistake made by inexperienced investors. From regular repairs to unforeseen emergencies, allocating sufficient funds for home maintenance is necessary to ensure that tenants are happy and that the home is kept in tip-top condition.

 

One of the biggest mistakes amateur real estate investors make is not planning ahead for foreseeable costs, such as home maintenance," says Philip Leung. Individuals are advised to save 10% of their income each month to ensure your tenants are living in a quality home. This gives you loyal, long-term tenants."

 

3 Neglecting financial planning

 

Investing in a buy-to-let property involves a significant financial commitment. Neglecting to create a comprehensive financial plan that includes ongoing costs, mortgage payments and more can seriously impact the profitability of a property. What's more, a key mistake made by many investors is a lack of a clear understanding of how to improve tax efficiency.

 

Overseas buy-to-let is a promising financial strategy, but it also requires care and professionalism. Avoiding the common mistakes mentioned above, developing a sound financial plan, choosing the right property and location, and keeping the home in good condition are all key factors in a successful investment.