Knowing if a property is a good investment isn’t easy. In fact, making the decision to buy can be a little daunting, especially if you’re buying a rental property for the first time. Here’s a few key property investment tips to consider when you’re on the hunt for your first, or next, rental property.
Who is it for?
It’s tempting to look at a property and visualise yourself in it. If you’re thinking, “I’d love to live here!” that’s great, but remember you’re not buying this property for you. Think about who you are buying it for, and the type of tenant you’d like to attract, and the questions they’ll ask themselves when they’re considering your property. Buying a six bedroom terrace in a student area isn’t a good idea if you don’t want to rent to students. The same applies to buying a house with a garden near a sought-after school, if you’d rather not rent to families with young children and pets.
Where is it?
It’s usually easier to make sound property investment decisions when you’re buying in an area you know. You’ll have a better idea of areas that are particularly appealing or quickly growing in popularity. It’s not always easy to tell on paper where the best transport links are, the best schools, or other amenities that make some areas more attractive and in higher rental demand than others.
Is highest rental yield always best?
There are almost always other factors to consider when buying a rental property than the average rental yield that an area is known to generate. Properties may experience less capital growth in these areas, so you won’t make as much profit when you sell the property in the future. Plus, the reality of a few percent difference in rental yield might not be a significant uplift in terms of actual money. You need to think about your goals and how long you intend to keep the property. Look at the bigger picture and do the maths.
Is the rental property in good condition?
This might seem obvious, but there are costs associated with renovating a property in addition to the costs of work and materials. While works are being carried out, the property will be unoccupied, so you’ll have bills to pay such as council tax for this period. You’ll also need to factor in the monthly cost of your buy-to-let mortgage (if you have one) while it isn’t being supported by a paying tenant, and you’ll need special insurance on the property while it’s unoccupied.
Doing your research starts before you even begin viewings. To stop you wasting your time viewing properties that simply won’t get you the results you want, make sure you speak to an expert. A local letting agent will have plenty of local knowledge to help you find the right type of property in the right area and take the hassle out of the search.
If you’re thinking of investing in Harrogate or the surrounding areas, we’d love to hear from you. We can be contacted via our website here which also has a handy free Landlord Guide that you can download.
