27th March 2007
What Mortgage – Where do you fit into the landlord lifecycle?
By Adriane Buteux
Landlord Mortgages has found that the average buy-to-let investor has a typical 'lifecycle', governing their investment choices and their overall market outlook. The first role a prospective investor adopts is that of 'thinker' when they take stock of the market and consider their options alongside the viability of such an investment. They then assume the role of 'researcher', gathering details about possible mortgages and dissecting the rates in relation to their available finances, as well as potential properties and target tenants.
Most interestingly, 92 per cent of potential investors do not get past this stage, foxed by the options available to them or put off after missing out on their dream property by a fraction. For the eight per cent who continue along the path to becoming a landlord, the next stage is 'proud owner'. They have the deeds to their first property in their hand and are basking in the afterglow of completing on their first investment property.
The vast majority (77 per cent) of investors stop here, keeping their hand in the buy-to-let game, but stopping after one purchase. Those continuing on will become 'fledgling tycoons', building on the success of their first property by adding more to their portfolio.
Investors then move into the 'bulk buyer' phase of their life as a professional landlord, purchasing several properties at once without batting an eyelid at the amounts changing hands. Their confidence knows no bounds and they are ready to commit 100 per cent, making property their day-job.
These newly 'full-time' investors are now fully paid up 'professional landlords', borrowing against new properties using a portfolio agreement and becoming highly geared as well as financially savvy. Every waking hour is spent looking for new properties, dealing with tenants or doing up another house to ready it for the lettings market.
The final stage in a buy-to-let investor's life is when they start 'just ticking over'. They're either approaching their retirement or have already reached it and are unable to sell properties due to Capital Gains Tax liabilities. These investors are not necessarily looking to increase their portfolio though, some may have even moved abroad or are comfortably provided for by their rental income.