When looking for an investment property, there are a number of things our friends at RWinvest advise their clients. From the type of investment to the location and developer, when investing in property there can be many elements to consider.
So, if you’re not sure where to begin, here are a few places you could start…
Location – is the investment property in a regeneration area?
Location is a big factor in choosing an investment property. A few years ago, for example, we strongly advised our clients to invest in Manchester. These investments are now paying off with the city becoming an integral part of the Northern Powerhouse and a key business hub in the North West. Areas of Manchester are now seeing house price growth that significantly outperforms that of their southern counterparts.
You should consider the economy of the area the property is in – look at growth in the economy and forecast for the future. Regeneration is also key; if there is money coming into an area, jobs will follow and therefore initiate more people moving to the area looking for property to rent. If investors are putting their money into the city, growth could be imminent.
What is the track record of the management company like?
This all depends on whether you are looking for a hands-off investment, where you need to do nothing but invest. A good management company could make or break your investment property, as they are responsible for sourcing tenants, day-to-day maintenance and keeping the existing tenants happy. We always ensure that the management companies we work with have a proven track record and are fully-equipped to manage the bespoke properties we sell to our investors.
When looking at a management company’s history, look at their current developments. Are these fully tenanted? Do they have tenants on waiting lists? It is important to see whether tenants are happy in their managed properties, so you can be assured that demand will remain high. If the company has managed properties like yours, this can be a good indication of how successful they will be.
Off-plan, completed or refurbished investment property?
Each of these buy-to-let investment types have their merits, but you need to assess which suits you. With an off-plan property, you can liaise with developers to have input in what the property will include and, in the end, you have something completely brand-new and purpose built for buy-to-let. These will often be situated in areas of high regeneration, so you get all the benefits of a great location and a brand-new property.
This type of investment can feel like too much of a risk for some investors as they can’t physically view the property, but these properties can also have assured rental returns, which can put minds at ease.
A completed property provides a quick way to make money; the property is finished and is often tenanted, so rental income can be made straight away. Investors can physically see the property but it may not be located in the same regeneration areas as off-plan properties. This option is great for investors who want to see returns quickly and do not want any risk associated with off-plan property. These properties may have a management company in place already, so research should be carried out here.
Refurbished properties are excellent for investors who would like to invest in a brand-new property, but still wish to view something physical. Refurbished properties have a quicker turnaround than off-plan and can provide faster returns. The fact a property is being refurbished may suggest it is in a regeneration area and this could mean demand is high from tenants. Some of these properties have strong heritage or local connections, adding another unique selling point.
Student investment property or traditional buy-to-let?
There are pros and cons for both investment types. Student investments are great for investors who want high, often assured rental returns in a property with low void periods. These properties are usually fully-managed and are hands-off, so investors can gain income while not having to manage anything day-to-day. In terms of exit strategy, student investment properties can only be sold to investors.
Buy-to-let properties continue to be popular with a large number of investors. The exit strategy is clear as the property can be sold to anyone – investor or buyer. These properties can also come fully-managed but, depending on the area, may not have as high rental returns or as low void periods as a student property.
Does the developer have a good track record?
The developer’s track record is equally as important and at RWinvest we look into this fully and perform due diligence on each developer, ensuring they meet our standards. It is useful for investors to look for previous completed properties from the developer and see whether these were completed on time and to budget.
You could additionally look at the types of property the developer has previously completed. For example, if you are looking at a period property, has the developer previously completed a property like this? This could give you an idea of how this project will work and whether it is suitable for your needs.
These are just a few of the things that we ask our clients to consider, we would encourage any clients looking for a property investment to give our expert consultants a call; they can talk you through your options and find you the perfect investment from our varied portfolio.
Sign up for regular property updates & receive investments in your inbox
Daniel Peacock