Everything You Need to Know About Finding a Buy-to-Let Hotspot
As a buy-to-let investor, one of the most typically agreed-upon skills is spotting up-and-coming areas.
You know what we’re talking about—areas on the cusp of becoming desirable residential areas with good capital appreciation potential.
Of course, if it were easy to find these areas, everybody would do it.
However, investors can watch for a few telltale trends and signs indicating whether an area is worth investment while property prices remain low.
Today, this article will look at four ways to spot the best place to invest before it bursts into life.
Read on for more information!
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Tip #1: Keep an Eye on Buy-to-Let Areas Popular With Young People
One of the top signs of an up-and-coming area is a large population of young professionals and students.
Often, people in their 20s and 30s serve as an indicator of good-value properties in areas with plenty of amenities.
In London, the likes of Brixton and Peckham enjoyed significant regeneration following the influx of young people.
Northern cities like Manchester and Liverpool also have up-and-coming areas that appeal to younger tenants.
Young people usually have smaller budgets but still want a good quality of life with things to do. This brings in additional businesses and increases house prices in the area, allowing for greater capital appreciation for buy-to-let landlords.
Just look at the Baltic Triangle in Liverpool. Thanks to a young professional and student population looking for budget accommodation close to the city centre, the Baltic Triangle has transformed into Liverpool’s answer to New York’s Meat-Packing District, complete with stunning new residential developments such as One Baltic Square, Parliament Square and Heaps Mill all contributing to a bustling residential market.
As such, the L1 postcode has an average property price of £139,733 and an average rental yield of 9.60% – a clear indicator of the area’s buy-to-let property potential.
Why not read more about other areas such as the London property market news?
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Tip #2: Look Out for Businesses Moving to the Area
As we touched upon briefly if mid and big businesses move to a city, it suggests prices will rise in the future. When these businesses break ground in a new city, they will either recruit new staff from the area or relocate existing staff, resulting in a rise in demand for properties suitable for professionals.
With an expanding job market and new prospects, more people will view the area as an attractive place to live.
Take Manchester MediaCityUK, for example. Thanks to the BBC’s presence in Salford, the area underwent huge regeneration and saw a massive uplift in property prices.
BBC came to the city in 2011. In 2014, the area saw a 12% price rise – the biggest in the country at the time.
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Tip #3: Keep an Eye on Regeneration
Regeneration is one of the biggest indicators that an area is on the rise.
Thorough regeneration schemes will bring new buildings to the area, improve existing buildings and make public spaces cleaner and more attractive to potential residents.
Liverpool’s Knowledge Quarter is one such area that has received significant investment over the last decade. Now, the area is a hub for innovation, science and technology, appealing to young professionals and students alike.
The L2 postcode now commands some of the best yields in the city and is close to university campuses and the local hospital. As such, rental demand in the area is huge. Such investment has encouraged new residential developments in the area — such as Liverpool’s first eco-property, Element The Quarter.
With demand so high, property price growth soon follows rent increases. In that instance, capital appreciation would be far more significant than if an investor had chosen somewhere without regenerative potential.
Interested in sustainability and investment? Take a look at our recent guide to regeneration in Manchester.
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Tip #4: Take Note of the Local Amenities
People like living near amenities like schools, good transport links and shops. If a neighbourhood has supermarkets and schools, people will choose to live there for convenience. There’s an added bonus if the area has good-value properties and future regeneration plans.
For instance, New Brighton has become one of the most desirable places to live in the North West after introducing a Morrisons supermarket and regenerating Victoria Road, transforming the area from a ghost town into a thriving seaside locale.
If a town or area becomes a visitor hub, there’s a good chance the property market will improve as well.
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