The most important thing about property investment is to know each and every aspect of the deal you’re getting. This can be quite daunting, especially for first time investors, but by following this checklist, you can research everything you need to know about a potential BTL opportunity easily. Here, I will show what you need to research to ensure your next investment is a profitable one.
Research the markets
Before looking at specific properties, it’s worth knowing what the markets are like as a whole in the UK. See what some of the country’s biggest property agents are saying about the state of the markets i.e. JLL, Knight Frank, Savills etc. They will give expert knowledge on the best cities to invest in the UK and provide up to date property news, so you know how your purchase will be affected.
Researching average property prices, analysing whether they are increasing or decreasing, and reading up on the latest property and political news to ensure no policies are being implemented that could negatively impact profits that can be achieved.
Research each property sector
There is such a wide variety of property investment avenues and whilst most follow the same set of fundamentals i.e. supply and demand, there are still differences to each of them and need to be judged on their own merits.
Residential property, student units, commercial sites, hotel rooms, care homes, car parking spaces etc.… It’s important to know what each of these achieve and how they stack up against each other. For example, student property is great for securing regular rental income but less so for its capital growth prospects. Traditional residential plots are better for capital growth but are normally more expensive.
It’s up to you to know what’s best for your money but researching each property investment sector will enable you to choose a property that best fits your goals.
Research the location
You need to know where the prime areas in invest in the UK are. Some are more lucrative than others and you don’t want to tie your money in a location that isn’t growing as much as it should.
The first thing you should know about the area you’re investing in is if there’s a strong demand for property in the area. If this is not the case, then your property will sit empty and you won’t earn regular rental income. A major UK city with great transport links, employment prospects and at least one university will have a strong demand for property versus a supply shortage. This pushes prices up whilst keeping rental income sustainable over a period of time.
Many first-time investors only consider their local area when it comes to investment which is a rookie mistake. The best place to invest is rarely around the corner from where you live and with a slew of managing companies out there to handle all the lettings responsibilities of your property, it enables you to look anywhere in the country.
Research who you work with
Working with trusted and established developers, solicitors, managing companies etc. is key to every investment you make. The last thing you want is to be let down by unscrupulous or incompetent companies who leave your investment in serious jeopardy.
Take the time to investigate the developer’s background for the property you’re buying. Make sure they have a track record of delivering sites on time and that sales progression will run smoothly. The same principle applies to the managing company you may employ to take your property on for you.
Research new builds vs second hand property
You may want to invest in a picturesque 3-bed period setting house, but then realise it requires a lot of maintenance work to bring it up to a good standard that will cost lots of money and eat into your profits. Also, if you choose a house, you may be responsible for finding tenants, and must be on-call to address any of their questions or problems.
Whilst these sorts of houses are innately charming, investors can be deterred by the constant upkeep and renovations. Many now opt for new builds or houses that have been refurbished by an experienced developer. The benefit of these types of investments is that being new, fixtures and fittings are likely to be in good working order. Also, blocks of flats are usually managed by an external company, which means investors do not have to spend their time sourcing new tenants and answering queries.
The decision ultimately lies with the investor and what sort of property they think will fulfil their investment needs, and how much money and time they can dedicate to it.
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