The basic raw material of your new business or the starting point of your portfolio. So – where do you start – what do you buy? In buying property for investment there are a number of rules that you should follow and it maybe considered a cliché but the first and most important rule is Location Location Location.
The second is to identify the type of property you want to buy, having considered what will be easier to let. Next – identify the tenant you want to attract – corporate or otherwise and last but by no means least – what do you intend to spend. There is an element of demand for rental property in all towns and cities but the key is to make sure you are in the right place with the right property to attract the right local market group and then ensure that your property is better than the competition so let’s return to location – a small house or converted barn in a rural location maybe appealing to you but what tenants will it appeal to? – You are not buying this property for you to live in – you are buying for anInvestment – another important rule to remember. You will appeal to a larger base of tenants both corporate and private if your property is centrally located in a town or city, within walking distance of a station, if you are in an area that attracts commuters but also within walking distance to shops, bars and restaurants. A City like St Albans has a large number of commuters, large businesses within the area, is attractive for those wishing to live out of London together with a population of students. It also has large numbers of young professionals who as yet cannot afford their own home and therefore want to rent.
It is generally accepted that apartments are more suitable for letting than houses, they have a wider appeal and will also be easier for you the property owner in terms of garden and external maintenance and also insurance and generally save you money for these items. Two bedroom apartments with two bathrooms are good, they appeal to the widest tenant pool, singles, couples, professional sharers and corporate executives so we have identified an apartment, probably two bedrooms with two bathrooms – do you buy new or second hand The condition of what you are buying is Key – there is more demand in the rental market for new fixtures and fittings and mod cons. Consider – that if buying second hand – do any works need to be done to the property before you can let? If so, you need to understand and add into your costing the time these works will take, if replacing the kitchen and bathroom and redecorating will take 2 months, you will not be able to start the works until you take ownership, therefore in the first 2 months you have void months, then you have to market the finished product which could take another month, secure a tenant, etc etc, before you realise you have 4 void months – not a great start to any business. You should also consider that you will incur legal fees from an early stage in the transaction, you then commission a full structural survey, which perhaps highlights defects, which in turn have associated costs. You are then faced with either a renegotiation of the purchase price or you may re consider the purchase itself – you may have incurred abortive legal fees. As a Landlord you will also have to provide compliance certificates, which in turn cost more money, and if for example the boiler breaks down after 12 months, you have to bear the cost for the repair or the replacement. I am not trying to dissuade you from buying property forInvestment – but seeking to prove a point.