Do new build developments make good buy-to-let investments? Well yes, they do, but you shouldn’t get distracted from the fundamental principles of investing in property. For any buy-to-let to work in the long term, rental yield needs to be high enough to cover your running costs or you will lose money very quickly.
Is Buying a New Build a Good Investment
When you have been looking for property investment deals you will certainly have seen a whole range of new build developments and off-plan properties that could have been either houses or apartments, or both.
Investing In Off-Plan New Builds
Off-plan property means, simply, that the property has not been finished, insofar as it is not ready for tenants to move in. The problem with investing ‘off-plan’ is that things can change as the development reaches completion. The development schedule might change or the works themselves. The value of the property could change. So that’s one thing you need to factor in with this kind of investment; the likelihood of change. But here, let’s step back and look at new build investment as a strategy in itself.
The Fundamental Principles Of Property Investment
When you are looking at new builds, with an eye to investing – whether they are on the market with estate agents, or off-plan and brought to your attention by a property sourcing agent – you should never lose sight of the fundamental principles of property investment.
New Build Developments
We, certainly, see a lot of great off-plan new build developments. They are in the right locations, have the right tenant profile and have the right long-term potential for growth.
But I stress again, if you are considering these kinds of properties then, most importantly, you have to ask yourself, will the yields work, given your situation?
You also need to have a look at the developers undertaking the work. What is their reputation like? Do they have a long history, as a company, or are they relatively young? Do they have the right kind of pedigree?
Maintenance and Running Costs
One advantage of investing in new build developments over existing housing stock is that new builds tend to be more energy-efficient and are therefore cheaper to maintain.
The existing, historic housing stock in the UK is great. It’s very stable, longstanding and in the right areas, there will be a lot of tenant demand.
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myResidential Team
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