If you’re thinking about investing in property, you should know that things aren’t always as straight forward as you might think. You won’t see the type of returns and profit from a property that you’d like without doing the right research beforehand, so it’s important to always look into the different factors that can affect the success of your venture. Here are three of the top things to research before investing to ensure your property venture is as successful as possible.
The rental yields
Rental yields are a key element of buy to let investments, as they dictate the type of returns you can expect to see. The easiest way to calculate rental yields is to take the yearly rental income of the property and then divide this by the purchase price. Once you have this figure, multiply it by 100, and you’ll be left with your rental yield percentage. Rental yields above 6 per cent are generally considered strong, while yields of 7 and 8 per cent can be common in a number of cities and are offered by leading property companies. RW Invest, for instance, offers UK properties in Liverpool and Manchester with rental yields as high as 7 and 8 per cent. Before making an investment, be sure to calculate the returns you can expect to see from the particular property and consider whether or not the returns it will bring are worth your time and money.
For investors who want to maximise their earning potential when they decide to sell their property later in life, capital appreciation is a necessary element to research. There are a lot of factors that can indicate the type of return on investment you’ll get when you sell your property. House price growth predictions are the main indicator of this and can be found according to the area you’re interested in investing in. In the UK, for instance, house price growth predictions show that the north-west region offers the highest rates of growth, while London is set to experience the lowest rates. This shows that although you might think that a property in a prestigious area will grow in value over the years, this isn’t always the case, which is why prior research is so vital. Another indicator of strong capital growth potential is regeneration throughout the area. If a city or region is experiencing high levels of regeneration and new developments, both the economy and the property market will be strengthened.
The area’s population
Think about the demographics of people that live and work in the area you’re considering for your investment, as this will largely tie into the type of property you should purchase. If you’re interested in buying a student property, for instance, you’ll need to know that the city your property is based in has a large student population. This way, you can rest assured that your property will keep void periods to a minimum as there will always be a high demand. These type of statistics can be easily found online, and by researching current housing market trends for your chosen location. You can normally guess the type of tenants you’ll attract based on the area and the type of property you invest in. For example, city-centre apartments tend to attract millennials and young professional tenants, while houses in more rural and suburban locations are likely to appeal to families and older residents. Higher overall populations are also something to look for if you’re investing, highlighting the popularity of a city and the levels of rental demand you should expect.