Getting to know the area before buying investment property
You need to walk around a location and really check out what each area is like at different times of the day and at weekends.
How easy would it be to find a parking space and how long would it take for your future tenants to walk or drive to local transport links and the shops.
Would your future tenants feel comfortable walking around on their own in the evening? Always remember to keep your future tenants in mind and what they want from their chosen rental location.
Stop off for a coffee and get the feel of the area and who likes living there. Pop into a local shop and get into conversation; this is a marvelous way of finding out what is going on in an area.
How do you know what to pay for an investment property you are going to rent out?
You really do not want to pay too much for a property. If you pay too much you carry the extra debt for length of ownership and will make less profit on a monthly basis and when you sell the property.
To help you determine the right price see what other properties of similar type, condition and location are currently on the market for by checking out property websites. Pricing on websites are guide prices. On property websites you can often find out what a property last sold for. Actual sold prices are posted on the Land Registry; usually added three months after a sale. https://www.gov.uk/government/organisations/land-registry
Find out how long a property has been on the market and if it was recently being sold with another agent or via an auction. Generally the longer a property has been up for sale, then the greater the potential for a price reduction. The property could have been over priced to test the market or need a lot of working doing to bring it up to good condition.
Find out the reason for the property being sold and make sure you know the actual cost of any works that will need to be carried out prior to letting. Make sure that the price : rental ratio works (yield). Remember you will need to add three percent stamp duty to stamp duty due (even property below stamp duty leasehold).
Who needs car parking space?
Do your tenants want a car parking space? Is an allocated space essential?
The need for a parking space will depend very much on location and the level of public transport in an area. I personally always invest in a property that has at least one parking space. The majority of tenants have a car, even if they do not use the car on a daily basis.
Do tenants want a garden?
Do the tenants in your investment area / location want a garden or just a space to sit out with plenty of parks and open spaces near by? A large garden to look after is not always what your future tenants wants.
Adding value to an existing property portfolio
Adding value to an existing property portfolio does not always mean buying another property.
When I am working with a client on their business development and strategy planning I always start off by looking how to add value / increase profit from existing properties first.
Does it matter if the property is leasehold?
When buying a leasehold property it is essential you fully understand the lease you are taking on. It is really important if you are wanting to alter internal structure of the property. You do not want to buy a property thinking you are going to be able to add or move internal walls to find out you cannot do so.
Planning may allow you to add an extension to the property but the lease may not allow the building works to be carried out on the property.
Changing the the external appearance with different style windows or paving over a garden space may not be permitted under the lease.
Remember house can be leasehold as well as flats.
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