When investing in property, it is essential that you know every last detail, so that you can be completely sure that the investment you are about to make will be worth your while. However, many of those that invest in property, and in particular the more inexperienced investors, are sometimes not too sure of the questions to ask or the details to check, especially with student accommodation. Therefore, we have created a checklist that will help you to be sure of what you are getting in to.
Is the Investment going to be able to Achieve High Rental Income?
One of the most important things to be sure about when making an investment into the buy-to-let property market is whether or not your investment will be able to achieve a strong rental income. Over the last few years, the average net yield in England and Wales has been 5%, so any yield above that mark would represent an above average investment. However, the yield that your property can achieve needs to be strong even when void periods and other expenses are considered; otherwise the investment may not be worthwhile.
Does the Investment offer any potential for Capital Growth?
When investors look at potential investments, they look at more than just the rental income as a way of generating money from the investment. Capital growth is something that most investors will look at, aiming to invest in a property that demonstrates a potential for capital growth, which could provide a level of profit when selling the property in years to come.
Is the Location of the Property Good Enough?
The mistake that some investors make is by believing developers or sellers of a property when they say it is located in a prime student hotspot, when really it is on the outskirts of the city. Most students will be looking for something nearby to the university, in the perfect position for them to access everything that they want or need, and this is a key part of their decision making process.
As well as this, you also need to be aware of which specific towns and cities achieve the most amount of rental income for the property type you are looking to invest in, as this could have a big impact on the profit you can make. If a property in one city costs slightly more than one in a different city, but can generate you more profit, it is certainly worth the slightly increased initial outlay.
How long is the Rental Guarantee of the Property?
Properties that offer a rental guarantee to investors are very appealing as it means that they are assured of a rental income for a fixed amount of time. If this guarantee is more than 2 years, then you look to have found a good property in the long term, whereas if it is a guarantee of less than 2 years, it shows that the developer might not be very confident in the property. A lack of confidence in the property suggests that the developer doesn’t believe that it will be able to generate a good enough amount of money for too long, and these are the properties you should avoid.
Is the Property priced too cheaply? If so, Why?
If you are looking at a property that you are interested in, but you feel it is priced a lot cheaper than you think it should be, you should certainly question the developer or seller, to find out the reason why. A student accommodation property will typically be cheaper if the size is smaller or if the facilities aren’t as good as they could be, and despite being cheaper to buy, they will also fail to get the best rental income, so they may not be the best thing to invest in.
Does the Property require much Time or Money before going on the Rental Market?
Although every property is different to the next, you will be blessed to find a student accommodation property that can be let out to tenants as soon as you buy it. Certain things will need to be done to it, but the amount of work needed is very important as it could mean that you begin to lose out on money.
Who will manage the Property?
There are two different methods of correctly managing this type of property. Firstly, you could manage the property yourself, or you could pay a management company to take responsibility of managing it. If you are managing it, a lot of your time will be taken up by phone calls and maintenance, whereas if a company manages it for you, this could eat into your profit levels.
Author Bio
Hopwood House have a wide range of UK investment property available across the country in the buy-to-let, care home and student property investment markets.
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Daniel Peacock