With the low interest rates many people are seeing their savings make poor returns in deposit accounts causing investors to look elsewhere for higher returns on  their money.  Some of these investors are now turning to property as an alternative source of income.

One of the places where the increase in activity can be seen is auction rooms.  12 months ago properties could be purchased at significant discounts at auctions, but today those discounts are reduced as more investors seek to purchase buy-to-let properties.  But, when you take into account the price falls of the last 12 months then those bidding are actually picking up better deals today as the overall market price has fallen.

In many cases buy-to-let properties can now be purchased with 6% + yields in the south east, higher yields of 8% + can be achieved in the north east of UK.  Overall, even after allowing for rental voids and management costs these provide attractive returns when compared with money left in a deposit account. 

But property investors also need to be cautious with respect to capital growth.  Many analysts are predicting the the recovery in property prices will be slow over many years, some even say it will be 2015 before prices recover to their peak of 2007.  For the investor this suggests purchases should be based on rental yields, not on hopes of short term capital growth.

One last comment, if you are seeking to invest in buy-to-let, make sure you carefully check tenants to ensure they will be able to pay the rent, you can purchase tenant checks from Credit Check Services for as little as £8.95.