by Lucy Cromwell
With almost 3 million landlords in the UK, the buy-to-let (BTL) industry is a competitive space. Concerns over the Renters' Rights are adding to the pressure, too, and creating more uncertainty around property investments. Nowadays, simply being on the property ladder isn’t enough to ensure your investment is a success.
As a property manager, part of your role might be to advise potential landlords on their investments. You can make this simpler by recommending crucial tools that weigh up the potential of a property, ensuring your clients are focused on the right features to help them navigate uncertain times.
Not sure what to recommend? Let’s take a closer look at the essential tools.
1. Local Yield Research
Rental yield is one of the most important factors to consider when weighing up a property’s potential. This helps your clients calculate how much they can expect to earn every year from their investment, and can be worked out as either:
- Gross rental yield: Yearly rental income, divided by the property purchase price and multiplied by 100.
- Net rental yield: Yearly rental income, minus your expenses (like maintenance fees and mortgage payments), divided by the property purchase price and multiplied by 100.
Before purchasing a property, it can be tricky to get an exact rental yield figure, but there are tools to help. PropertyData reports accurate insights into the rental yields of similar properties in the same area. It can also provide other data for property investment, including inflation figures.
Your clients can use this to benchmark the expected rental return against their target yield and quickly spot locations where returns are high before committing to an investment.
2. Local House Price Inflation
We briefly mentioned inflation when discussing rental yields, but why does this matter?
House price inflation can vary in different areas, depending on factors like localised supply and demand, and mortgage availability. Exploring local house price inflation gives your clients a better idea of how their initial investment could increase (or decrease) over time.
Use online property data and reports to learn more about local house price inflation. By comparing areas with stronger growth against those with slower or negative inflation, your clients can then identify which postcodes are more likely to deliver both steady rental income and long-term appreciation. Using this data alongside rental yield is a game-changer for honing in on BTL hotspots.
3. Property Valuation Platforms
If a property has been sold previously, your clients can often find data on sale prices.
This is available on platforms like Rightmove and Zoopla, which provide old valuations, historical sales data, and even trends on how the property’s value has shifted over time. While these platforms don’t always have an exhaustive list of sale figures (especially for properties that haven’t changed hands in a fair few years), they offer a solid starting point.
You can also recommend a quick Google search of the property address. This occasionally uncovers useful information, like archived listings and marketing for the property.
For property managers and their clients, valuation platforms are a brilliant way of exploring:
- Capital growth potential
- Comparable property values
- How valuations have changed over time
Your clients might even stumble upon information about previous rental activity, such as old listings and rent values. While this type of data is less widely available, it can provide useful insight into the sort of rent landlords may be able to charge.
4. Mortgage Calculators
If your client is considering investing in a BTL property, it’s not just about the potential of the space itself, but also how much they can invest in it. This is where understanding how large a mortgage they can secure is crucial.
Mortgage calculators provide a simple and effective way to get to grips with borrowing potential. By inputting their basic data, like job title, annual income, and deposit, your clients can quickly find out how much they’d be able to access in a mortgage (or at least a fairly close estimate).
They can also look at options for different repayment plans and interest rates to secure the best choice for their BTL investment.
Once your clients know how much money is available to them, they’ll have a better idea of the properties in their price range, and you can help them start a property search.
5. Tenant Demand Analytics
Understanding tenant demand is just as important as assessing yields or house prices. Even if a property looks to be worth a lot, if the demand just isn’t there for a BTL, your clients are less likely to make a profitable investment. To avoid BTL houses sitting empty, get to grips with what the local market wants.
Advise clients to use property data platforms for instant insights into the most popular number of bedrooms for local BTLs, for instance. You can also do your own research by keeping an eye on local listings. Look at which properties get snapped up quickly and which tend to hang around, pinpointing information like:
- Location
- Number of bedrooms and bathrooms
- Whether it has a garden
- Property type (e.g., new build, terraced, cottage, or flat)
Can’t find a lot of data online? Advise clients to speak to a local letting agent for insights into what renters are searching for, and whether their potential investment fits the bill.
Strong tenant demand means your clients' BTL should be rented out quicker, with fewer empty months between lettings, and the potential for a higher rental yield.
6. Survey Hardware Tools
For our hands-on property managers and landlords, you might be looking for a physical way to judge property potential. This is where survey tools come in handy.
For clients looking at a limited number of properties, they might consider renting out surveying equipment. As a property manager, you may already have the equipment needed to help your clients, including:
- Damp Meters: These are essential for checking if there’s hidden moisture inside walls, floors, or ceilings. Damp issues can be expensive to fix and impact both rental value and long-term maintenance, so identifying them early is crucial.
- Pipe and Cable Detectors: Before knocking through walls or planning renovations, these handheld devices help clients locate hidden pipes and wiring to avoid costly mistakes.
- Laser Measuring Tools: Take quick, precise room measurements for planning layouts and calculating square footage.
- Thermal Imaging Cameras: These are useful for spotting issues like insulation gaps, heat loss, or hidden leaks that could affect the investment.
- Drones: Use a drone for external surveys, allowing clients to check the condition of roofs, gutters, and chimneys without expensive scaffolding.
While these don’t mean your clients can skip essential survey and health and safety checks, they do give landlords (and property managers) a better idea of the property’s condition before anyone’s laid down any hard-earned cash. It’s a smart way to get to know potential properties a little better while keeping expenses to a minimum.
Final Thoughts
When helping clients find their next property investment, it’s smart to remember that there’s always more to a space than what meets the eye. We hope the tips in this article will help you advise your clients on the best investment for their portfolio, budget, and future tenants.
Searching for more property management tips? Check out the latest on our blog.