Industry News, Property Investment Guidance

How to decide where to invest in property

How to invest in property | Lifestyle Property People

We’ve all heard the saying “Location, Location, Location”. It’s not just a catchy phrase; it’s one of the golden rules of property investment. 

When it comes to investing in property, location is everything!  

Choose incorrectly and you could be stuck with a property that will struggle to increase in value, you will find it hard to find suitable paying tenants and you won’t achieve the necessary rental income needed to make a profit.  

But where do we begin? What makes a good property investing location? In short, it means buying a property in a location with strong capital growth over the next 10 years and somewhere that has strong rental demand.  

But how do you find this out and what should you look for?    

Firstly before we begin, before even deciding where to invest, you need to understand your goals, why you’re investing in property and then develop a property investing strategy to help achieve that.  

There’s no one-size fits all solution and every property investing strategy has its positives and negatives.

Some people prefer property flipping for a short term cash injection, some love the idea of Airbnb, while some people would rather have a long term, set and forget strategy so choose to invest in BTL’s. This is a personal decision and one that you need to really think about.  

If you need help working it through, our Property Investing Roadmap Session could help you figure it out.

What makes a great investment area

As a property investment company, we have predefined areas where we source properties for our clients. We choose these areas based on the following criteria:  

GrowthBy examining historical data, recent home sales, and house price trends over the past five years, we can pinpoint areas poised for further capital appreciation. 

Established Areas – We only look for established houses in established and well-developed areas. We stay away from new builds (as you get less for your money & a lower return) and off-plan projects. 

Local Amenities – Choose areas that have access to great local amenities such as schools, shopping centres, doctors and recreational spaces.  

Demand – A good area is nothing without good demand. We look for urban areas with steady rental demand, aiming for homes that tenants will consider a long term family home.  

Development – Look for areas with extensive regeneration projects, new developments, and emerging employment opportunities as these areas not only attract tenants, but they also see house price increases.  

How to choose your investment areas

Now that you know what to look for in an investment area, you can start researching different locations.  

It’s always best to start looking locally (unless you live in London!) as you will already know the surrounding areas well and will have a good sense of areas in demand (and areas to avoid too!)  

It’s sometimes not possible to achieve high rental yields investing where you live. So if you don’t have the time to look further afield, get in touch and we can discuss how we can help you invest in the North, hands-free.   

If you’re looking to invest further than your local area, a quick online search can give you an initial first impression of locations you can look further into.  

We use PropertyData.co.uk and StreetCheck.co.uk as they show us key data on postcodes such as how long properties are tenanted for, what the local schools are like, social behaviour patterns, property prices, rents, and much more. 

Top Tip – an area with a large percentage of owner-occupied housing would suggest a more desirable place to live and capital growth will be stronger. 

Oh, and here’s a great trick: hop onto Google Maps and start plotting your investment area. You can mark out spots that appear to be great areas to invest. 

Once you’ve put these potential locations through the above criteria, you can zoom in further to find the sweet spot.  

Why you shouldn’t go for the cheapest or the most expensive property

It can be tempting to go for the most expensive property – after all, surely paying more a property = higher rental income, better quality tenants and better returns? 

Or maybe you’re tempted to go for the cheapest property which would mean the amount of money you need to invest is smaller.  

When looking for properties, it’s important to identify the cheap and the most expensive properties and then find the sweet spot in between.  

These properties  

  • Attracts long-term tenants – people want to stay there & make a home = constant demand 
  • Offers affordable housing prices 
  • Strong returns and capital appreciation over time 

 

What types of properties should you choose

So, we’ve covered how to source the ideal location, we know what type of area we need to invest in – great! But how do we then choose a property within our criteria? 

This ultimately comes down to your investing strategy.  

Based on your investing strategy, you can then start to look for the type of property you would like to invest in.  

We invest in buy to let properties – they may not be the most exciting property investing strategy out there, but they are bread-and-butter of the property investing world because they are stable, predictable and provide us with the perfect set-and-forget investing strategy.  

When looking for the perfect BTL property, we stick to these criteria: 

  • 2-3 bedroom
  • Semi-detached or terraced houses   
  • £85k – £160k   
  • Family homes with garden   
  • EPC rating of D or above   
  • Double glazed & centrally heated  

But again, this will all depend on your investing strategy and your long term financial goals.  

Article 4  

One final aspect to consider when evaluating your area is Article 4 Directions. 

Properties situated in Article 4 areas are subject to restrictions on certain permitted development rights imposed by the local planning authority. This directive can be implemented anywhere if the local authority deems it necessary. Typically, property owners can make minor alterations without needing planning permission, a process known as ‘permitted development.’ However, in areas with an Article 4 Direction, a full planning application is mandatory. 

Article 4 areas primarily concern HMO investors, particularly when a developer intends to convert a single-family dwelling into a house of multiple occupancy and undertake major renovations. But our top tip would be that, even if you are purchasing a standard buy-to-let property in an Article 4 area, check with the local council regarding any restrictions before buying or starting renovation work. 

Summary

After understanding your long-term goals and developing an investment strategy to help achieve them, find your area using our checklist.  

Keeping your budget in mind, delve deeper into the area and identify the sweet spot. Finally, see what returns are achievable by looking at property prices and rental rates.  

And if you’re struggling to make sense of it all or realise that you don’t have the time to do all this groundwork, then we can help. Book a free 30-minute discovery call  to see how.  

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