Five ways to research a new buy-to-let investment
Choosing the right buy-to-let investment is rarely a straightforward task. There are many factors to consider and the level of research you carry out before making a purchase could be crucial to your future chances of investment success.
With the early stages of the year traditionally a popular time for investors to plan expansion and growth, here are five tips on how to go about researching your next acquisition.
Gather the background data on your investment location
When researching your next investment, making sure the numbers add up is vital and there are various approaches you can take to ensure this.
The HomeLet Rental Index can provide you with valuable insight into the UK rental market, such as average prices per region and an analysis of rental trends month on month.
Property portals, such as Rightmove and Zoopla will give you a good grasp on which locations have the most active rental markets as well as a rough idea of average yields and rents.
For more in-depth market analysis, Hometrack or the Council of Mortgage Lenders (CML) could also prove useful resources.
Meanwhile, if you want to get under the skin of a potential investment area, tools like Dataloft and Property Detective can help you to analyse demographics and local amenities, helping you to decide which locations are most suitable.
Talk to other landlords
Connecting with other landlords can provide useful insight during the early stages of researching a new investment.
Online forums can be a useful way to speak to experienced landlords to see how they approach new investments, which types of properties they find the most profitable and how they factor in all the additional associated acquisition costs.
What's more, if you're planning an investment in a location far away from where you are based, you could speak to local landlords about the pros and cons of the area before visiting and making a final decision. They will be able to give you a good idea of the rent you could be charging as well as the streets and property types that are most popular with tenants.
Speak to an experienced letting agent
Once you have identified an investment location or a specific property that fits your criteria, another beneficial exercise is to speak to an experienced letting agent.
They will be able to provide you with a detailed view on the current rental market, as well as an up to the minute demonstration of local levels of tenant demand.
If you're planning to invest in an area where you already have a property managed by an agent, this could be the perfect time to review your current agreement or perhaps even explore the option of working with a new firm.
Letting agents work their local market every day and so their guidance and advice can prove invaluable.
Visit potential investment locations
Remote online research is important during the initial stages of the process, but nothing can beat actually visiting a prospective investment.
Once you have decided on the area or property you're targeting, you should arrange to make a visit to get a feel for the opportunity.
If you have identified a location, a visit could help you to understand the local rental market, investigate the property stock and begin to make contact with the best local letting agents.
If you’re further down the line and have already got a specific property in mind, organise a viewing with the selling agent so you can inspect it and determine its suitability as a buy-to-let investment. You can then also explore the local streets to improve your understanding of the surrounding area and nearby amenities.
A combination of research, figures analysis, communication and gut instinct is usually the best way to reach a winning formula.
Try to stay ahead of the curve
By considering which areas are primed for development or regeneration, as well as those with rising employment opportunities, you could invest in an area where average rents and property prices grow significantly over the longer term.
Taking more of an interest in events like property auctions and identifying key stakeholders are other possible ways of unearthing a great investment opportunity.