Being able to always put yourself in the shoes of a potential renter is a very useful skill when considering where to purchase a buy-to-let property. What’s in it for them, you should ask. This is perhaps the number one rule for anyone offering a business or service – and believe it or not, buy-to-let IS a service – of sorts.
Too often landlords just snap up properties thinking they’ll be easy to rent out, whereas the opposite is often the case. This is why you need to ask yourself hard questions as to who will be renting your property and why. Buying a small studio in the back end of no where with zero transport links and no amenities close by is NOT a recipe for buy-to-let success!
So what key factors make a town or city a top spot for buy-to-let investors? We’ll start with perhaps the most obvious point…
It’s not just about tenants – it’s also about you and your rental income. There are areas which manage to achieve higher yields in comparison to others – for example, recent research showed that landlords in commuter belt cities Elmbridge, South Bucks and Three Rivers are earning the highest average rental income out of London. The big hint is in the words “commuter belt” of course – which is why transport links and “commutability” are winners when it comes to buy-to-let properties.
So, when you’re thinking of buying a property, work out how quickly it would take the average person to get to work in the closest city. If you’re purchasing outside of London it’s about bigger towns rather than the tiny villages – which although picturesque – are often badly located. The kind of properties close to main stations with easy access to the bigger cities are very good for families with parents who commute, for example. And think about how long it will take YOU to get to your property – after all, you’ll need to keep an eye on it, and you won’t be wanting to traipse across the UK every couple of months or so – particularly if you’ve more than one property.
If you want to buy a bigger home in an area that is convenient for those with small children, it’s important to think of certain key things. In cities, relatively affluent families tend to opt for more ‘suburban’ parts of town, rather than deal with the hustle and bustle of the centre. Think open green spaces, parks and spacious properties. Then of course there are schools – a major consideration for any parents! Buying a property in a good catchment area is therefore a definite win. You cannot go wrong with this. Just make sure it’s not TOO close to the school – this could be off-putting due to the noise.
A great bet for those looking to invest in buy-to-let property are university towns. What could possibly go wrong? Fresh waves of students each year looking to rent property in popular spots. If one tenant decides to leave, it won’t be too tough to find another. Data from Zoopla in 2013 showed that northern cities such as Glasgow, Manchester and Hull were high-yielding destinations for student landlord investments.
Properties that need improvement are every buy-to-let investor’s dream. This is because you can always add value in a way that’s not so easy with the average buy. If you’re looking to rent out the property in the meantime, it’s best to purchase a property that needs tweaks rather than full on work – or you won’t be able to set a reasonable rental rate. You can always draw in students saying there’s a discount on the price of the monthly rent because there are minor works going on too! Cities which have a lot of older properties potentially in need of a bit of work can prove to be real hotspots for property investors – just make sure you do your research first.
If you’re wanting to make a great return on investment, check out small towns close to other popular towns. Many parts of London for example have benefited from the ‘ripple effect’ whereby as one area becomes more popular and therefore more expensive, people buy further out to get more value for money. This is happening around large cities and is a good chance for a buy-to-let investor to make money. So think about where the next hotspot will be and get investing! This is how fortunes are made.
As a landlord you need to use your know-how and skill to pinpoint a location desirable for you. Just always have a clear plan and put yourself in the shoes of your target market – and you can only succeed.