Developing your property portfolio or getting into property investment for the first time is very much dependent on choosing the right properties to invest in. Finding the best investment properties can be hard though as you have to do quite a bit of time-consuming research to understand how good of an investment a property could be. Some properties are money pits whereby you have to spend a lot of money just to get the basic infrastructure right, so if the final sale price doesn’t give you enough margin you could find six months of hard work results in no profit for you.
So let’s take a look at some of factors you can quickly weigh up to see if an investment property is worth taking a deeper look at.
Finding the Best Investment Properties
First rule of thumb when choosing an investment property is find the worst property in the best street. That’s the ideal situation because the final sale value will be maximized, whereas the initial purchase price will be far below. This will give you a healthy margin to play with in between to renovate the property to a high standard and reap the rewards when you come to sell it.
However, that’s not always the best choice for everyone, it very much comes down to what your own skills are. If you aren’t planning to do much renovation work yourself, but bring in contractors to carry out the work, then there’s not going to be much profit margin left for you at the end, the contractors will have benefited rather than you. So if you don’t do the work yourself then look for a house that needs tidying up rather than needs structural renovation. A property that just needs a fresh lick of paint, some new flooring and perhaps new doors can be totally transformed without much work and use of contractors.
Another thing to consider is the local area, how have house prices altered recently, are they on the rise or fall? When you look at local news articles about the area you will discover whether there are plans to develop the area, or the area is starting to get a bad reputation for crime, congestion and lack of amenities for residents. Ideally you want to invest in an area that is also being invested in by local government and transport companies. Getting in on a hot up and coming area will mean that while you own the property it will appreciate in value naturally even without any work done on the property itself.
Something else to consider if you plan to buy to let is what are rental prices like in the area? And how does your property fit into the typical renters profile. If an area is occupied mainly by students or low income renters and you buy a large property it is better to split it into a multi family property rather than try and rent it out as one home as it won’t attract the rental income you require.