How To Identify A Good Investment Property

Looking to invest in property this year? You’re not alone – buy-to-let investors snap up approximately 10% of properties in the UK according to Yahoo. What’s more, according to Finbri more than 50% of existing property investors said at the start of 2023 that they’d be actively pursuing additional property investment opportunities in the year to come. It’s no secret that property is deemed one of the most stable asset classes – after all, people will always need homes, and the current disparity between supply and demand makes property investment a particularly lucrative way to earn at home. But if you’re set on investing in property soon, how can you guarantee that you’re purchasing a good investment property?

Do Your Research

When searching for a good investment property, research is key. No matter how good a neighbourhood may seem on paper, or how cheap the properties are in the area, it is vital that you do your due diligence.

Ultimately, you’ll be searching for a property that will generate impressive long-term yields and capital growth, and will continue to be in-demand. You can achieve this by finding a property in a region with impressive development potential. Areas undergoing redevelopment are primed for the future and offer jobs in construction, long-term career hubs and will draw-in tenants and buyers in both the immediate and long-term. Regeneration doesn’t just increase tenant demand – it boosts property value. Recent research has shown that urban redevelopment contributes to large boosts in property prices both before implementation and after completion. So, if you’re looking to hold on to a property for a number of years before selling, or want to purchase with an interest-only mortgage, you’ll certainly benefit from the financial boost of nearby redevelopment. Keep an eye out for the following regenerative works:

• New schools and hospitals
• Revived shopping centres
• New infrastructure and transport

Also focus on what is happening in the neighbourhood in the short term. Ask the following questions:

• Is crime low?
• Is traffic bad?
• Noise pollution/air pollution?
• Good reputation?

It is certainly worth exploring the area in-person if possible. Talk to locals, explore the neighbourhood and see whether it would appeal to your average searching tenant.

Understanding Yields

The next stage of your research should revolve around the potential yields you could obtain from a property purchase in your desired neighbourhood. Take time to research the local property market – what price do properties sell and let for? This will provide you with insight into what potential yields you can achieve and can help you identify a good investment: after all, how can you tell an investment opportunity is exceptional if you don’t understand the local market in the first place? Generally, a good yield sits at around 4.75% according to PropertyData, which is worth bearing in mind when searching for a good investment property. Similarly, make sure you understand the gross and net yield your investment will create for you. Gross yield is your overall yield without taking into account deductions and expenses, whereas net yield looks at your overall take-away after the relevant deductions.

Looking at websites such as PropertyData can give you detailed insights into the types of yields you can expect per postcode or area. This is particularly helpful when you have located a town or city you wish to invest in but want to know which specific postcodes locals are looking for, and which will generate the best yields. You can also pinpoint particularly lucrative yield hotspots if you’re struggling to find a specific location to invest in. We recommend combining your own research with the professional opinion of a local sales and lettings agent such as Centrick who have a detailed understanding of the local market. Fill out the form at the bottom of this blog to get in touch with our team!

Amenities

The key to a good investment property isn’t just finding one that will accrue in value, but one that tenants actually want to live in! It’s important that you understand what tenants are looking for, especially in your area. For example, is there a famous park or shopping centre that residents want quick and easy access to? Are there large community hubs that attract swathes of visitors?

More generally, tenants will want access to amenities that allow them to live a convenient lifestyle, such as:

• Train, bus and tram stops
• Parking
• Ample outdoor space
• GP’s, hospitals, vets
• Corner shops, supermarkets

Want to learn more about what amenities the modern tenant expects? Check out our blog here for our insights on sustainable living, convenient amenities and technological innovation.

Earn At Home With Centrick

Finding the perfect investment property is no easy feat, but Centrick is on-hand to make your journey towards building a stable and reliable portfolio as easy as possible. With local experts in Birmingham, Solihull and Nottingham, our team can provide valuable advice to investors, no matter the budget or experience.

Speaking of valuable advice… have you explored our Earn At Home hub? With an abundance of blogs and up-to-date insight on investment strategies, you’re sure to find something of interest. From deep dives into the mortgage market, to making the most of your savings, Centrick has something for everyone.

Not found what you’re looking for? Simply fill out the form below for more tailored advice – we’d love to hear from you!