Single let property is the most common form of buy-to-let investment and is considered one of the easier ways to enter the property investment sector. A single let is when you rent out a property to one tenant, whether one individual or one family.
As you’re dealing with only one renter, single lets are typically less work than HMOs, but returns can be lower, especially when compared with HMOs and other buy-to-let opportunities. Additionally, only having one tenant can lead to more void periods, and it’s a more substantial loss if a tenant falls behind in rent or moves out, providing less security.
Single let properties can be a great investment to start with or an investment to diversify your portfolio as it’s an easier investment strategy to understand and carry out. As it’s a pretty straight forward investment strategy, single lets are simple to manage, especially if you opt to use a letting agent.
Capital appreciation and rental yields
If you buy a single let in the right location, there is potential to earn both lucrative rental yields and capital appreciation over time. These types of growth vary across the nation, but the average rental yield across Great Britain comes to 4.5%, according to specialist lender Kent Reliance.
You can get much better rental yields in the North of England, making it a lucrative region to purchase single let investments in. The North West boasts an average rental yield of 6.2% with certain locations within the region having even higher yields. On top of that, research from Halifax revealed the North West saw the strongest house price increase across 2019, showing the region offers room to earn both capital appreciation and rental income.
When looking at the potential rental yield of a property investment, it’s helpful to look at both net and gross yields. Gross yields are easy to calculate and can help you easily compare property investment deals by taking the annual rent and dividing it by the property price.
Net yields take costs into consideration, so you subtract the costs from the annual rental income and divide that by the property price. This is more accurate as it’s based on the return you’d end up with after paying for the costs of the property investment.
Important steps for investing in single let property
As with any property investment, location is key for single lets. A great location offering high rental yields and capital growth is the ultimate goal. Up-and-coming areas can be great locations to make the most out of a single let property. And if the property is in an attractive location, tenants are more likely to be happy in the rental, as a good location is a top priority for renters.
Secondly, finding an ideal tenant is important. You can do this yourself or a letting agent can do it for you, but it’s imperative to get a tenant who will pay their rent on time, take care of the property and enjoy living in the rental. It’s often helpful to have an ideal tenant in mind and cater the property for that demographic, which are often families and young professionals.
Next, it’s necessary to look at the cost of setting up and running the rental property and ensuring that the rent pays for more than the mortgage, maintenance and other necessary fees. And keeping the tenant happy throughout the tenancy is vital in order for renters to stay longer, leaving you with less void periods.
Assessing single let property investments
Many properties are suitable for single lets, but it’s important to assess what kind of tenant it would be a best fit for, whether a young professional wanting extra amenities or a family looking for space maximisation and a kid-friendly home. And location is imperative to be considered as that is a key factor in the success of a single let.
To assess property investment deals, use PropertyMenu’s Deal Calculator to find transparency behind projected rental yields. Pick your chosen exit strategy, including single let, to help you decide whether a property investment deal you’re considering is the right investment for you.