What should you really look for in a property deal?
Buying a home with the intention of letting it out is a completely different beast to buying one to live in. It will require careful consideration to ensure you get the best rental income and a good investment property.
If you choose well, you’re going to benefit from short and long-term gain. In the short term, you’ll be receiving rental income each month from your tenant. Once you’ve covered your outgoings, the rest is yours to invest, save or spend. And in the long term, you’ll benefit from the capital gain that your property generates.
When assessing your next property investment deal, you’ll want to look out for some key things. We’re here to tell you specifically what to look for and why it’s so important.
Return on the investment
If the property is likely to generate a yield of 5% or higher, it’s a good bet for buy-to-let. If there’s not a high rental demand in a particular area, you may want to consider if you should invest there. An easy way to find this information out would be to speak to your local letting agents. They’ll have a good idea of what the rental demand is like in the area you’re looking in. Rental demand can significantly differ neighbourhood to neighbourhood, even street to street. But getting in touch with the local experts would be the first obvious tip.
If you’d like to check the likely rental income on a property you’re interested in, call us today to arrange a free valuation.
Check how long the properties take to rent out
A quick scour through on the onthemarket.com and zoopla.co.uk and you’ll be able to see how long properties took to let out in the location you’re interested in. Again, your local letting agent will probably have the best idea of high demand areas and neighbourhoods. If the demand is high, properties will get snapped up quickly.
What is the capital appreciation in the area?
If you’re investing for the long term then this one should be a given. Remember, our advice to budding investors is to look at your buy-to-let projects as great long term ventures – not for those of you looking to make a quick profit. Capital growth means the property you’ve bought may make a nice income in the short term – but it also is going to make you a nice bit of profit in the long term too. You need to ensure you buy a property in an area that will see some good house price growth.
Buy close to where you live
Or at least buy in an area you know something about. Find out if there are any regeneration projects going on or are planned for the future. Are they building a new transport network? Is the location having a large sum of money invested into it? Also, think about the demographic you’re targetting – if they’re commuters, does the area have good transport links? If you’re targetting students, can you buy a property near the bars and colleges? These are the sorts of questions you need to ask yourself. And if you’re unsure of the answers, speak to an agent.
Think about the job market in your area
The more jobs there are, the greater the potential rental income. Look to see if there are many major employers coming to the area and invest in property ahead of potential price increases.
Consider crime rates and lifestyle
Well, it goes without saying that both factors affect the desirability of a neighbourhood. The lower the crime, the better the lifestyle on offer in a location. Are there sports facilities, schools, shops nearby – Can people enjoy a good quality of life in your area of choice?
Why is this all so important?
We’re not saying you MUST tick all of these boxes, but it’s a great place to start and to get you thinking about the sorts of questions that are key to making smart investment decisions