Where to Invest in Property for Max Profit
Along with “how the heck am I going to finance this?”, this is one of the first questions any investor asks himself.
My answer? “It depends.” Come on, you knew it wasn’t going to be a simple one!
What does it depend on? It depends very much on what your investing objectives are and also on what your strategy is. We’ll take a look at those now…
What’s your objective?
If your main objective is long term capital growth then you’ll want to invest in a slightly more upmarket area. These areas will tend to have a healthier property market and therefore discounted deals may be harder to come by.
I’m guessing that capital growth may not be your main concern though.
In days gone by, investors looking for cashflow traditionally bought in the poorer areas where property values were lower and the rents were proportionally higher. This gave higher yields. This was my strategy in the early days, until I discovered new creative investing techniques.
Cashflow without the hassle
I found that by using creative property investment strategies, I got more cashflow without the “hassle factor” that I got with high-yielding, low end properties. I didn’t have to deal with low quality tenants or maintenance problems any more.
If you’re using lease options then you’ll find that they work best in solid first time buyer / starter home areas. You’ll be looking for an area with reasonably priced houses (not flats). Maybe terraced or semi-detached homes with front and back doors and a garden.
If you’re going down the multilet route then you can’t get much better than a University area. At the very least you’re looking for an area with decent employers that have a younger demographic.
Do your DD!
It doesn’t matter how good a deal you got if there’s nobody there to rent it once you buy it! Doing proper due diligence is essential in any property deal. That way you’ll know up front who your target market is and how easy they will be to come by.
Check transport links. Unless you’re targeting an area where people mostly drive and there is parking available, you need to pay close attention to transport links. Probably any more than about 10 minutes walk to the nearest bus stop or train station is going to cause you problems. London tenants may be willing to walk a bit further.
Where to invest in property is dependent on your location too.
Most people in the UK will have a great local area to suit their strategy not too far away from where they live. Especially when you’re just starting out, I would keep it to an hour’s drive away from your home max — preferably 30 mins. I have a few flats hundreds of miles away but I’m glad most of them are closer to home.
Sticking closer to home will be to your advantage when it comes to research too as you’ll already have some local knowledge.
Hung up on hotspots?
Please don’t get hung up on finding the next property “hotspot”. Sure, doing your research properly may help you luck out and buy in the next hotspot but hotspots are by definition speculative. If you are using the right techniques then you will be making your money by getting a discount when you buy rather than crossing your fingers and hoping for a speculative increase.FREE Case Study »