Choosing the right investment property is an important decision, here are three simple steps to help get you on the right track.
Buying as an investment?
Know your area
It is vital to understand the types of property that are most sought after by tenants in your area – remember this could be very different to the most desirable from a owner-occupier’s perspective. Keep in mind that you’re not searching for your own home, try to remain open minded and listen to any advice you are given from those in the know.
Know your target market
Are you looking to rent to students, professionals or families? Each category will be slightly different in terms of the advice given and therefore the most suitable properties so you need to be clear about this before beginning your search.
Know what returns
The return on your investment (yield) is extremely important. The general rule of thumb is that a return of above 4 percent is good although this will vary from area to area and, particularly in London, the likely capital growth will also need to be factored in. Anticipated yields are easy to calculate by dividing the expected annual rental income into the purchase price.
This figure is a great starting point but remember that you will need to consider the running costs and any investment you may need to make in the initial redecoration, renovation and/or equipping of the property. It is important to sit down and consider ALL of the costs involved before taking the plunge.
Hopefully these tips have given you a starting point. However for more detailed advice you can contact our specialist Landlord Advice team or for a more local view, why not contact your local Townends branch?