Buy to Let and Buy to Sell – two very different animals
Many people think about property investment generically, without really considering the very real differences between acquiring a property as a “buy to let” (BTL) investment versus buying a property for resale, or “buy to sell” (BTS). And although the differences may seem obvious, the nuances really can determine which is most suited to your own personality and situation.
One key aspect to Buy To Let is that it involves tenants. And tenants come in all shapes, sizes and with varying degrees of associated issues. There are a range of government rules and regulations that govern the landlord/tenant relationship and you need to be aware of all of them. You’ll need different insurance, possibly bespoke financial arrangements and lots of patience. With BTS you are trading a commodity, whilst BTL is a service that your business is providing to a long term client.
Unlike Buy To Let, a BTS property investment is (hopefully) a short term scenario, whilst BTL could be thought of as a passive income strategy. When buying to resell at a profit, you will always need to have another project in the pipeline in order to keep the cash flowing. And there are lots of costs to eat into your profits. Not least servicing a mortgage prior to the resale. So you need to think short term with BTS, whilst a BTL strategy involvesÂ long term strategic planning as your investment will be realised only in the medium to long term.