Landlords lose track of investments
A quarter (23%) don’t measure the returns they make at all, leaving £300bn worth of buy-to-let investment unmonitored.
Steve Bolton, founder and chairman of Platinum Property Partner, said: “Professionalism in the sector has yet to catch up: a staggering amount of capital investment is not being managed diligently or being treated like a business.
“While bricks and mortar has a more tangible feel than other forms of investment, you wouldn’t leave stocks and shares to their own devices without regularly checking their worth.
“Landlords need to treat a BTL portfolio in the same way and regularly assess the performance of their properties to check whether they’re on course.
“Without a clear picture of what they ‘earn’ from their BTL investment, a landlord is more vulnerable to market fluctuation, and less able to predict how a mortgage interest rate rise or falling property prices could eat away at their investment.”
In terms of landlords who to do keep tabs on their investments just one in five (21%) measures the return on investment – where gross profits, the cost of the property and capital gains are all taken into account.
Indeed, less than a quarter even understands what return on investment means, despite it being the most effective way of monitoring property investments.
Four in 10 (38%) landlords prefer to work out the gross yield – where they calculate rental income as a percentage of the property purchase price.
Platinum Property Partners has advised landlords to set proper goals of what returns they expect from their buy-to-let portfolios.
Landlords should compare property investments to other asset classes, properly measure the return on investment and to get advice on the meaning behind financial terms if they don’t understand, the property investment business added.