Whether you’re an established landlord or a first-time investor, you’re likely considering your investment options: a move-in ready rental or a property requiring renovation. Which is the optimal choice?
Currently, significant changes surround rental regulations, and reports indicate many landlords are divesting. However, numerous investors are still entering the rental market. Coupled with the potential downturn in UK house prices, this might be your opportune moment.
But what should you invest in?
A turnkey rental is immediately habitable upon purchase, while a renovation project demands repairs or extensive enhancements for tenant readiness.
Both options have advantages and drawbacks, which we’ll delve into further.
Market Value
Generally, renovation projects are more budget-friendly compared to ready-made rental properties. This is because you enhance its worth through necessary work, making it a more appealing residence for tenants.
Turnkey rentals may command a premium, particularly if prior landlords have experienced profitability.
Additional Expenses
With a turnkey rental, you’ll incur costs for the property, legal fees, and agent commissions before renting. Maintaining a contingency is wise for potential post-purchase issues. Additionally, expenses like gas safety checks, electrical assessments, and updates might apply. Beware, some labeled turnkey properties may still require work. Avoid skipping vital steps like a thorough survey before purchase.
While purchasing a renovation project saves on initial cost, expenses might shift to repairs, refits, and decoration. Yet, these can be managed within your budget, tailored to the rental market’s demands.
Design
Though not a concern for all landlords, some prefer specific rental property standards. Turnkey properties come as a comprehensive package, restricting personalization (unless willing to spend). Conversely, renovation projects allow tailored designs for the property you envision.
Time
Property acquisition is often protracted, more so for renovation projects. Prior to rental income, substantial work is needed. This duration, spanning months, halts rental earnings and maintains mortgage payments. A key advantage of turnkey rentals is swift tenant placement upon completion.
If you’re looking to invest in a buy-to-let, please contact us
