Finding Profitable Investment Properties

If you’re considering investment properties as a long term method of making money then you’re going to need to find the right properties from the start. It’s pointless buying several really cheap investment properties, putting in the time and effort to get them to a rentable standard and then have them stand empty because they aren’t what tenants are looking for.

Research is the key to a profitable investment property so make sure you don’t skip this stage in your excitement to buy a property that seems to have good buy to let potential.    

So what classes as profitable?

Simply put, investment properties are only profitable if they can be rented out continuously to paying tenants. The bigger the gap between the monthly or annual rental income and the outgoings on the property i.e. mortgage payments, landlord insurance and any other associated costs, the better your profit. Any profit is better than no profit though, so the key is to make sure the property is rented at all times.

Finding the right investment properties

So, if the key to making profit is to have tenants at all times then your investment properties need to be attractive to as many types of tenant as possible. For example, a ground floor flat will appeal to many more people, and especially those who may find stairs difficult to climb or who have small children, than a first floor or even a basement flat. Similarly a family-sized property with a child-friendly garden will attract more enquiries than one with a concreted or patioed garden, or no real garden at all.

You need to think carefully about the types of tenant you want to attract into your investment properties, and then their main needs, before searching for the ideal property.

Where to look

Probably the best place to start looking for profitable investment properties is at the local property auctions. Visiting an auction can often save you around 30% on the market value of a property, which means you not only get an investment property, you get one that already has equity. Admittedly a lot of auction properties do require cosmetic work but once completed they generate considerably more in rental income than the mortgage payments cost.

So, providing you research the rental market in the area carefully, including the type of tenant that commonly enquires about properties, you should have a solid base to start from.

For example, let’s say you want to buy investment properties on the outskirts of London, and after considerable research you find an area that appeals to you. You then research the area in terms of property rentals and find that one and two-bedroom flats are in highest demand. With this information you can then scour the property auctions, the inheritance property websites and the local newspapers for investment properties that match tenant needs. If you find a couple great, but if you don’t, consider widening your search to include similar residential areas in other parts of outer London.

It isn’t difficult to find investment properties in the UK but it does require a bit of time and commitment to find properties that are going to be profitable within weeks of buying them. Think about the type of tenant that will be searching for property in your area of interest and work from there. Hopefully it won’t be long before you start to recognise profitable investment properties before your fellow landlords.