In This Guide
Administration
Being a landlord
Buy to let investment
Choosing the property
1. Consider the tenant's view
2. Choosing an area
3. Choosing the property
4. Buying new homes
5. Buying tenanted property
Finding tenants
Letting property
Lettings agents
Levels of service
Preparing the property
Problem tenants
Tenancy
Choosing the property
Choosing an area
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Aside from considering the area from the point of view of individual tenants, you must not forget to look at the bigger picture and think about some of the broader issues affecting the area as a whole.
Many people recommend that it is useful to know the area in which
you are going to buy. Certainly local knowledge is important,
but there are times when it can sway your opinion in the wrong
direction, for instance if you have had a bad experience of living
in an area that essentially represents a good investment. There
is definitely a case for getting the (possibly) more objective
view of a lettings agent in the locality. They will help you understand
the peculiarities of local market requirements - supply and demand
are key to your decision.
You have to remember to be objective about both the area and the property itself. Your own taste is not hugely important. Medium and long term market requirements are what matters most.
Always try to choose an area where there is a good market for
rental property. This sounds really obvious, but is not always
considered by some landlords. Outside of city centres, choose
areas of high demand - near universities, nursing colleges, large
employers and so on. These sorts of institutions should guarantee
that there will always be a continuing stream of prospective tenants.
Bear in mind though, that some areas will appeal only to certain
types of people, so you must be prepared to let your property
to that social group unless you want an empty house on your hands.
Local employment prospects have a large affect on the demand for properties. Look out for towns that are popular with relocating companies - most staff will usually rent before they buy, so can lead to high demand. Don't forget that corporate lets usually offer a good return and are generally pretty secure.
Some areas may have a surplus of rental property that well exceeds
demand, which could mean that you have to accept a lower than
expected rental level, or else risk having an empty property that
is bringing in no income whatsoever.
If you are going to manage the property yourself, you should almost
certainly choose an area close to where you live. You are more
likely to know the tradesmen and other service providers in your
own area and you will inevitably need them at some point in the
life of the property. It is also much easier to deal with an emergency
if you are usually within easy reach of the property.
When you're thinking about which area to buy in, it can be tempting
to go for an area that is being touted as a current hot spot.
This is a dangerous tactic. Once an area is being regarded as
a hotspot, you will probably have already missed out on the biggest
gains in the price value of properties.
Your best bet is to try and predict the hot spots of the future,
though this is not an easy task. Think about the location, transport
links, active interests in the local economy, up and coming schools,
EU and government redevelopment grants and think ahead to what
the place will be like in three to five years time.
Over time, there are fewer and fewer potential hotspots in an area, as the concentration of high value properties rises. The phenomenon of buyers being forced to look further afield for homes that they can afford is known as the ripple effect. Areas that people are looking to move into when they can't quite afford the current hotspot often give you an indication of the next rung down on the ladder.
Also, look for area that will benefit from large investments in infrastructure nearby, such as new transport links, shopping centres, regeneration programmes and so on.
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