What to look for in a Property Investment

If you want to be a property investor you’re going to need at least one investment property, but how do you choose which one to buy? There are literally hundreds of thousands of houses, flats, bungalows and bedsits currently available on the market, and choosing just one with buy to let potential is no easy matter. So how do you make the choice?

Consider the tenants

One of the first things to think about is the type of tenants you want to attract. As a private landlord you ultimately get the final say in who rents your buy to let property, so try to match the property to the type of tenants you want.

For example, if you are looking to attract families or couples who are thinking of starting a family you’ll want to find a rental property with several bedrooms, maybe two bathrooms and a garden. Younger couples or singles might consider price rather than space and so a flat is probably a better choice if you are interested in tenants without children. Likewise, if you want to create a student house you don’t need to consider décor as much as convenience i.e. large kitchen, two bathrooms, numerous bedrooms etc.

Look at the local amenities

One you have decided on the type of tenants you can start to search for the right investment property. As an example let’s say you are looking for a rental property suitable for students. The perfect house will be situated close to the local college or university, close to the local shops, close to a public transport route and maybe within walking distance of the library etc.

In this case you might want to look for cheaper investment properties that require nothing more than modernisation or redecorating – things that don’t cost a lot to fix and can be completed quickly. By putting in a few hours of manual labour you can often make run-down properties suitable for students, and on a very low budget.

Calculate the costs

So you’ve found the perfect property investment opportunity – now you need to work on the money side of things. How much will the buy to let mortgage lender need as a deposit? How much will the mortgage payments be each month? Will you need to borrow extra money for things like modernisation, redecorating, estate agents fees, bills until the property is rented etc.?

Can you comfortably afford the buy to let mortgage payments if the property doesn’t rent for several months, and when it does go will the rent cover the on-going mortgage payments with a bit left over as profit? Will you need to pay letting agents to manage the property or will you do it yourself? If the rent only covers the mortgage payments then it may be that you need to look for a cheaper investment property.

So as you can see choosing a rental property isn’t simply a case of buying the house or flat that you would like to live in. You need to think logically and you need to think investment. Research the rental property market in your area thoroughly before making any offers, and then only do so if you know the property you’ve chosen is generally in high demand.