Buy-to-let vs Buy-to-sell

At property events many investors who are just getting into property ask my advice on which is the best strategy to follow.  There’s never a ‘right’ answer, everybody’s circumstances are different.

•  Buy-to-Let (BTL) gives you a much smaller monthly profit (if you do it right) for years to come, with the bonus of potential capital growth (depending on where you buy).
•  Buying-to-sell (BTS) gives you a significant cash lump sum (if you do it right) within months.

Within each of these strategies are many sub-strategies, such as commercial to residential conversions, HMOs, serviced accommodation and many more.

Buying to sell

Some people focus on BTS because their current circumstances mean they can’t get a BTL mortgage. That prevents them using the BTL strategy, until they’ve built up enough profits to establish a sufficient credit record and they become mortgageable.

Some people choose to buy BTS properties that are ‘doer-uppers’ and can have their value dramatically increased by some cosmetic work or by solving a problem.  This is a quick way to build up a cash reserve as buying well below market value (BMV) and then uplifting the property value is an effective strategy for this.  However, some people choose to buy properties that need no work doing to them – often at auction, but can be sold at a profit on the purchase price paid.

Buying to let

Some people buy properties that they can do up, because they can increase the value, get a mortgage against the higher value and have relatively little of their own cash left in the deal.

Obviously, you’ll need both a deposit and the cash to do the refurbishment, but if you’re looking to purchase properties that need work done at well BMV you can find that these are unmortgageable, because of the problem that needs solving.  That means finding an alternative to a BTL mortgage.

The bridging solution

If you don’t have enough cash to purchase the properties you want or, at present, lenders don’t see you as a good risk to lend to, bridging finance is an excellent solution, regardless of whether you are buying to sell or buying to let.

Some people choose to use a combination of strategies.  Usually people focus on what they are able to do and choose strategies which meet their objectives and priorities.

You can learn more here:

• Contact Kevin Wright over on his Facebook page.
• Browse the Recycle Your Cash online training library by clicking here.
• Attend a 2023 Buy-Refurb-Refinance Summit event - BRR Summit