This week, we are pleased to include a guest article from David Humphreys of Buy To Let Ltd, a company specialising in all aspects of residential property investment. The company runs a website http://www.buy-to-let.com and also run a consultancy business for budding new landlords. In this article, David writes about the buy to let market in South London and why he sees it as such a happy hunting ground for investor landlords. We hope that it will provide an insight into the thinking of a residential property investor and provide a framework for thinking about other areas.

There are a number of reasons why we at Buy-To-Let.com like South London as an area investment. In fact, we like it so much that all the properties that we have purchased in London for clients are in the South London area, as are all the properties in our own portfolio.

The area we are keen on stretches from Kennington in the east through to Wandsworth in the west and south to include Dulwich, Balham &Tooting.

The two main reasons that we have found this area to be so successful are:

• There is a constant year-round demand for quality houses and flats for professional sharers.
• There is a reasonably good year-round supply of suitable properties, available to buy at prices that still make sense.

The majority of our tenants are young professionals either working somewhere in the city (not necessarily in the financial sector) or working locally in the service sector, which includes both the professional and leisure worlds.

There are a number of factors contributing to the high demand amongst our tenants for property in these areas:

• Firstly, given the good transport links into the city centre, the tenant's workplace is almost always within reasonable commuting distance. Equally accessible are the leisure 'hotspots' of Chelsea and the West End.
  
  
• On a local level, the areas in question are well-served by a very good local leisure infrastructure. There is also an abundance of green areas, a lack of high-rise buildings, with the exception of some ex-local blocks, and a feeling of openness that is often lacking in inner city environments.

For these reasons we believe that there will continue to be a sustainable on-going tenant demand for the foreseeable future and certainly for the next 10 years.

The bulk of the properties we tend to go for in South West London are ex-local authority properties, originally bought by their owners under the 'Right to Buy' scheme, usually being sold on for the first time.

Throughout this area there are numerous developments originally constructed for the local authority, where over 60% of the properties are now in private ownership. These developments are slowly gentrifying and provide relatively spacious accommodation, when compared to modern purpose built properties. They also tend to be located close to public transport, which is a must, and close to good leisure and shopping facilities, which is also very important.

The price of this type of property has doubled over the past two years and whilst that level of growth is no longer being sustained, there is still scope for some healthy growth in capital value.

A common misconception amongst first time landlords is that the investment stops once you have bought the property. The truth is quite different, especially if you are to make a success of the venture. Often you will find that the property, be it a house or flat, requires 'modernisation', which can cost anything up to £10,000.

In many older properties, the flat's coal bunker still exists, as well as solid wall larder cupboards in the kitchen, both of which usually need to be removed in order to allow better use of the space. Whilst the property may have central heating the old coal fired back-boiler is often still in-situ, which again needs to be removed and the space converted into an alcove. It is often a good idea to install a Combi Boiler, removing the existing hot water tanks and converting the space into storage.

The property, whether a house or flat, will almost certainly require rewiring to comply with today's standards and often both the kitchen and bathroom need updating with the addition of a good shower. We always install built-in wardrobes in the bedrooms, floor to ceiling and as large as possible. When showing these properties the size of our wardrobes always draws favourable comments from prospective tenants.

All this work is necessary if you are going to attract the type of tenant referred to, as today's young professional have high standards when it comes to the interior of the properties that they rent. They are looking for good value and are quite prepared to rent 'ex-local' property provided that it all stacks up, that is location, gentrification and high quality interiors.

• Beware anything that does not look or smell right. Outside the property, avoid scrap cars and graffiti and on the inside if the halls and lifts smell, stay away.
• Beware properties that include a single bedroom. This generally occurs in 3 - 4 bedroom flats and houses. Professional sharers want equality of space and the one with the single bedroom is going to get the short end of the stick in numerous ways.
• Don't buy above the 2nd floor unless there is a lift and don't buy ground floor unless the living room and bedroom(s) are screened from the road or pavement by a high (6 ft) wall.
• Try and buy properties that face south or west. In the case of flats it is the living room that faces south or west, in the case of houses, the rear of the property.

As of Spring of 2001, prices and rents that we are working with are roughly as follows:

1 Bed Flat - 100-125k - 180-200pw
2 Bed Flat - 140-160k - 240-260pw
3 Bed Flat - 150-175k - 325-350pw
3 Bed House - 175-200k - 340-360pw

The primary return on this type of investment is capital growth. If you are looking for income then there are other locations that provide higher yields, though generally at the expense of growth. Unfortunately it is very difficult to get the best of both worlds in terms of high growth and high income.

Given that you are going for growth then, if you take up an 85% mortgage, the minimum cash requirement for investing in a 2 bedroom flat is often upwards of £30,000. This includes your deposit and all the other costs that you need to incur to get the property to a 'ready-to-let' state. Generally, you will have no problem getting a mortgage for this type of property, provided that it is in a low-rise block of no more than 7 storeys.

The market is always active and you should expect to have to make an offer on the day, or at the latest, the day after viewing. From an investment point of view, if the property has been on the market for even a couple of weeks, it is a fair bet that it is either overpriced or in the wrong location.

Now you might expect this page to continue on and go into detail on the areas within South London such as Battersea, Clapham, Earlsfield, Stockwell and Kennington to mention five or to look at an area such as Clapham that can be further sub-divided into Clapham North, South, Common and Old Town, as can other areas, and possibly even highlight developments within these areas where we have bought properties.

Although, we do know the areas and the developments, we are, amongst other things, Buy-To-Let Consultants and earn our bread and butter by advising and acting for investors. So I am afraid that this is the end of the free information and advice.

However, if you would like more information in the form of targeted advice or help either on a hand-holding basis or a full turnkey service where we do all the work for you, please contact us, but bear in mind that we will expect to be paid.

As regards specialist letting and estate agents that we regularly either buy through or use for letting and management we can recommend the following:

Estate Agents
Bairstow Eves - Battersea - Tony Ennis - 020 7924 2777
Halifax - Jason Carlon or Gareth Maclean - 020 7924 1011

Letting Agents
Lloyds - Battersea - Steve Rowe Davies - 020 7978 6333
Ludlow Thompson - Tooting - Marcus Locke - 020 8682 1234