When you take property investment down to its fundamentals, there are three, key factors which influence its success. These are choice of location, choice of property and choice of tenant. Of these, your choice of location is arguably the most important since it will heavily influence your options for choosing property and hence choosing tenants.
With that in mind, here is a quick guide on how to tell if an area is worth your investment funds.
Check the internet
Over 90% of homes in the UK now have access to fibre optic connection. In the vast majority of cases, however, that connection is Fibre to the Cabinet. Basically, this means that fibre optic cable is used to connect two main points, but copper cable is used for the final step to your door. You can think of this as spending most of a journey on the motorway before ending up on country roads.
Currently only about 3% of homes in the UK have Full Fibre to the Premises (FTTP). This is exactly what it sounds like. The fibre optic connection goes right to your door. This delivers not just a major improvement in speed, but also a lot more reliability. In other words, it’s currently as good as it gets for home-workers, students and computer gamers. This means that if you can identify an area which is due to have FTTP rolled out, you should definitely pay attention.
Follow the train lines
Traditional advice to property investors is to look for property at the very end of train lines or slightly further out from it. The logic behind this is that these areas tend to start out unloved but ultimately become attractive and popular. In a post-COVID19 world, investors might want to look even further out, especially if there are good road links or plans to build them.
The reason for this is that there are very strong signs remote working is here to stay. It was a growing trend long before lockdown and now it has been proved that it can work on a large scale and for extended periods. It’s, therefore, safe to assume that employers will be thinking carefully about whether or not it could benefit them to implement it.
Realistically, working from home permanently is not for everyone. Even if it were, many employers might still be somewhat uncomfortable about it. At the very least, they’d probably want to know that their employees were close enough to their main premises that they could make it to the office at least fairly easily if it were ever needed.
Working between the home and the office permanently, however, could be a very appealing option for both employers and employees. Right now it could make it much easier for employers to implement social-distancing. Going forward, it could allow them to reduce the size of their offices, thus saving on rent (or sublet part of any office they own thus bringing in an income).
For the employee, it would mean only going into the office for part of the week instead of for the whole week. This would mean that a commute which would have been utterly unacceptable on a full-time basis would become entirely feasible, especially if the price was right.
Look at the local economy
If all you see are chain stores, it means one of two things. Either, the area is unlikely to become more attractive any time soon or it’s already well on the way to becoming highly desirable. The type of businesses you see will tell you which it is.
In the former case, it may be worth watching for signs of change. In the latter, you may have missed the boat (although there will always be other boats). If, however, you really like it, you might want to try taking a closer look to see if there are still any bargains to be had.
If, however, you see a mixture of budget chain stores, independent shops and a few premium retailers, then you may well have found an area which is in the process of redevelopment.
On a similar basis, keep your ears to the ground for any major employment developments in the area. Remember that a company does not need to be a big name to be a big deal in the area. What matters is that they create jobs as this generally means that other improvements will follow.