Welcome back to The Journey, our six-part series designed to take you, step by step, through the process of becoming a first-time property investor in the buy-to-let market.
In our first blog, which you can access by clicking here, we discussed setting up and getting organised. Now we’re going to focus on the property hunt and, more specifically, finding your first target property.
Before we begin we should note that your property hunt will most likely be both on and offline. You should look to combine all available tools, including the likes of Property Pal and Property News (if you’re here in Northern Ireland), Google Maps, local council websites such as the Northern Ireland Executive, NI planning portal and LANI and most importantly real-life site experiences from viewings.
Also, keep in mind that this is a process that also relies on experience and intuition, two qualities you’ll only ever gain over time.
Now, let’s begin!
For the sake of The Journey we’re focusing specifically on Buy to Let properties and the reason behind this is that most people buy their first rental property as a pension investment. The large majority of property investors in the UK and Ireland fall into this bracket and you might be interested in joining them.
When deciding on what type of Buy to Let you want to purchase understanding the numbers is vital. You should properly define your reasoning for investing in the first place and go from there. Are you investing for capital growth or cash flow or, in an ideal world, both?
After that you need to decide on what type of property best suits your needs and what type of tenant you are marketing to, e.g., Family, professional, student, or social market. Only after you’ve made that decision will you be able to identify and address essential requirements for your target market.
Students, young professionals, foreign nationals, young families and more all have different needs and wants and it’s highly likely that your new property can’t be all things to all people.
One great way to identify what potential future tenants want is to simply ask individuals e.g., established landlords or agents who are providing tenants a service that you want to provide. They might be able to give you key insights into the thoughts of a modern-day tenant in your target location.
Location, Location, Location!
It shouldn’t come as a shock to anyone interested in property but location is one of, if not the, key factors in what property you buy and any subsequent successes or failures.
Location is crucial no matter what target tenant you want but keep in mind that “a great location” doesn’t always mean “central”.
Young professionals might want central properties close to nightlife but other tenants will have different requirements. Young families might be searching for a home in the suburbs or close to certain schools. Students will most likely want accommodation as close to their place of study as possible and certain workers might want to be as close to a factory or place of work as possible.
Location is important but it can mean different things to different people.
What to Look For: Inside or Outside
After deciding on the type of property, your ideal tenant and the general location of your target property it’s time to get out there into the big bad world and start the hunt!
To keep things simple, as this is The Journey for beginners, we could recommend you split what you’re looking for into inside (the building) and outside (the building).
Outside should be fairly self-explanatory. Here you should analyse the neighbourhood and try to get a sense of the area as a whole. What type of shops, eateries and businesses operate in the vicinity? What type of schools, parks, amenities and services are nearby? Identifying these things should help you determine whether the area has promise or not.
On a smaller scale, but still outside the property, check if the property has private garden space and parking opportunities either on site or in the surrounding streets. Both elements can be highly desirable in certain areas and push up rental prices and overall capital growth…if the price you pay is right.
When judging the inside of a property you’ll only truly know what to look for as you gain experience over time but you should be aware that good quality kitchens and bathrooms are always a requirement and generally raise the value of any property. You might also want to consider how the property receives its heating and electric as tenants can have issues with utilities and we would always recommend getting a property survey done to identify any underlying issues that could come back to haunt you.
Alongside all of the above, to begin with, you could ask for advice from trusted individuals in the know such as tradesmen, other property investors or estate agents.
When to Purchase
Deciding when to make your move should be relatively simple. You should only move to purchase when you’re happy that your target property ticks all the boxes, e.g., type of property, location, figures work, and rental demand.
If you’re confident that you’ve found a deal that works then you should act, whether that be alone, as part of a group or with a joint venture partner but if you’re unsure then wait.
Proper research is essential if you’re to avoid the worst and this can take time.
Until Next Time...
Finding the right property, or conducting any sort of property investment hunt, is defined by asking yourself a series of questions.
Who is my target tenant? What do they need? Does the property cash flow enough, what if interest rates rise? Can I sustain this? Does this property require more investment post-purchase? e.g. painting, carpets, etc.
The more you question your decisions the clearer your thinking and strategising should become but if you’d like to push even further forward on your investment journey you can check out our upcoming Belfast Property Meet events here and our Property Success University here.
Next time we’ll take you through the purchasing process from bid to buy!