Top 5 Reasons to Invest in a Ready-Made Opportunity
While not the traditional method of Buy-to-Let investment, a pre-let residential property (PLRP) is a rare opportunity to attain immediate benefits that can kick start any property portfolio or investment strategy. Often described as a ‘ready-made’ investment, this type of opportunity can provide a number of unique benefits that take the hassle out of investing while providing initial returns.
What follows are the top five reasons to invest in a ‘ready-made’ investment property and how it can help you attain your investment goals – whether it’s financial security or building a portfolio.
Immediate Rental Yields
Possibly the most obvious benefit – and certainly key for investors – is an immediate and consistent rental income. By removing the need to hunt for a tenant, investors can start their investment journey with set returns and the reassurance that wouldn’t be guaranteed in a traditional off-plan investment.
The property will also be experiencing the natural effects of the market, potentially building capital growth while generating the all-important rental income. This results in a much higher net yield as the property is returning from day one.
A Proven Payment History
According to a survey of landlords by uPad, 18% cited rent arrears as their primary concern. Missed payments can have a huge effect on the overall performance of an investment strategy and potentially derail a plan if amplified over a portfolio.
A pre-let property largely mitigates this by providing a thorough payment history of past and current tenants. This information can provide incredible insights into the potential success of an investment as investors can see if the apartment has been vacant recently and whether it’s popular with long-term or short-term tenants.
Just remember, this does mean that you’ll also be inheriting previously agreed rental income figures per month.
Less Hassle for Investors
A huge positive for some investors – especially those investing from overseas – is the reduction in the initial set-up that a pre-let resident property requires. These types of investments are called ‘ready-made’ for a reason, vastly reducing the amount of administration necessary on the side of the investor.
Furnished and tenanted apartments also reduce the need for initial furnishing, decorating or repairs, reducing potential set-up costs. For an investor that might not be able to regularly manage their own investments or may live overseas, these ‘ready-made’ investments offer the perfect opportunity to take advantage of a prime development and location delivering immediate returns.
While the purchase process may be slightly different from traditional Buy-to-Let investment, many investors find that the benefits far outweigh the changes to the purchase procedure.
No Initial Void Period
As you’d imagine, while investing in a tenanted apartment can mean immediate rental income, it also means that there’s little-to-no-chance of an initial void period. As dangerous as rent arrears, the periods of time when an apartment is empty (and thus not generating income) can have a huge impact on the overall success.
Consider having to pay the mortgage repayments on a property you’ve invested in because you cannot find a tenant. Now consider that amplified across several properties within a portfolio. This is a worry for many investors and the primary reason many experienced investors will recommend keeping a ‘rainy-day’ fund to ensure void periods can’t do too much damage to your overall investment.
You can find more guidance of the do’s and don’ts of investment here.
Strike While the Iron’s Hot
Obviously, every investor wants to invest in a prime market. Identifying an emerging location experiencing sweeping tenant demand or incredible amenities can make the difference between a successful investment and a failure.
A ‘ready-made’ investment allows you to find these prime locations and invest in them quickly. With no need to wait for a tenant or the necessary set-up administration, a PLRP can allow investors to start reaping the benefits of strong yield performance immediately. Combined with a long-term strategy that allows for capital appreciation and you can see why these assets are ideal for maximising returns.