Every property investor knows the importance of creating solid property investment strategies. Property strategies, including your exit strategy, are like a business plan. When it comes to buy to let property, your strategy is pretty straightforward – purchase a property for the purpose of renting it out to tenants. In order to really succeed, however, there are additional things you need to think about and factor into your investing decisions. Here are some of the reasons why your buy to let efforts might not be going as planned.
You’re investing in the wrong locations
Look online, and you’ll find site after site telling you about the cities and areas with the best investment options. This is so common in fact, that it can be difficult knowing what to believe when making your investment plans. That’s why doing the right level of property market research is such a crucial part of any property investment strategy. Investors that have been fed the wrong information could end up purchasing a property in a negatively-performing area, resulting in low rental returns and possible void periods due to a lack of demand.
The best property investment strategy involves making an investment in property in a location that’s proven to offer some of the best buy to let opportunities in terms of rental yields, demand, and capital appreciation. By doing this, you put yourself in a much better position and give your property portfolio a higher chance of succeeding and generating positive cash flow.
You’re ignoring capital growth
When getting started with buy to let and exploring property investment options, it can be easy to get sucked in by impressive rental yields and low prices. While yields are definitely a big element of all good property investment strategies, you could be limiting your chances of success by focusing solely on this figure.
An investor who buys a residential flat in an affordable area of a city, for instance, could reel in some impressive yields if the property price was low and levels of demand are high. This is all well and good in terms of rental returns, but if the area the flat is based in is run-down with no signs of growth or regeneration, you’re missing out on your potential for capital growth and a rise in property values. By the time you come to sell the property, you could find that the market value has seen little change, or may have even dropped.
Every property investment strategy in the UK should factor in capital growth when selecting an investment type, as without doing this, you won’t benefit from the ability to make money from both rental returns and an increase in value when you choose to sell. Successful property investors will look at every way to make a return on investment to get the most out of their UK property investments with regular returns and capital gains.
You don’t know your tenant profile
Understanding your tenant profile is so essential before you begin your buy to let journey. With property investment, UK cities attract tenant demand from a range of different renters. Before you put your property on the market, you should think about the type of tenant that’s likely to be interested in the investment as this will allow you to tailor the design and amenities towards them.
For instance, you might see student property as one of the best type of properties for a property investment strategy in the UK, in which case the obvious resident will be student tenants. To give yourself the best chance at success, however, you should pay attention to special details that could help your property stand out to this tenant. If you researched the student market in the UK, you’d find that students favour qualities like proximity to their university campus, high-speed internet, and modern designs and furnishings. Other luxury amenities like an onsite gym or round-the-clock security and maintenance are also desirable. By knowing this information about your target tenant, you can take your property investment strategies to the next level and offer attractive qualities that your competitors may be lacking.
When creating a property investment strategy, UK cities like Liverpool and Manchester are the perfect areas to focus on for your investments, presenting some of the highest yields, strongest rental demand, and booming house price growth. We’re a property investment company with a proven track record of success, offering our clients the best property investment advice to help their property strategies go further. If you’re interested in buying an investment property, explore our range of student and residential property investment options in these top cities with RW Invest.