When looking at an investment property, there are a number of things we at RW Invest advise our clients. From the type of investment to the location and developer, when investing in property there can be a lot of elements to consider.
So if you’re not sure what you should be asking yourself, here’s 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. For example, we advised our clients a few years ago strongly to invest in Manchester. These investments are now paying off with the city becoming a more established part of the Northern Powerhouse and areas seeing the fastest house price growth; outperforming its southern counterparts significantly!
You should look at the economy of the area each property is situated in, look at growth in the economy and forecast for the future. Regeneration is also key, if there is money coming into an area there will be jobs to follow and therefore 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 point 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 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 companies history, take a 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 management company have managed properties similar to 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 see 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 see a 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 they may not be in the same regeneration areas as off plan properties, this investment is great for investors who want to see returns quickly and do not want any risk associated with off plan property. These properties may also have a management company already, so research should be undertaken here.
Refurbished properties are excellent for investors who would like to invest in a brand-new property, but still can see something physical. Refurbished properties have a quicker turnaround than off plan and can provide returns faster. 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 RW Invest we look into this fully and perform due diligence on each developer insuring 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 also look at the types of property the developer has previously completed on. 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.