Both student and residential property provide lucrative opportunities to secure stable investments within the buy to let market. However, it is important to consider multiple factors before embarking on your first venture into the property industry.
Getting to Know your Tenant
Understanding what you deem as your potential client should be one of the initial steps you take. Deciphering between student and residential, the latter tends to attract a longer-term tenant that may be seeking a place to reside for work, whereas student property can benefit from the relentless student numbers that are faced with the challenge of searching for the perfect property in an industry increasingly trying to cater for the rise in demands.
Choosing the Right Location
“Location, Location, Location” is a mantra used as a determining factor in the price of a house. When investing in property, it is important to do your research on the location. Once you have reached a decision on your type of investment (student or residential), you must ensure you determine where the current property hotspots lie, keeping in line with your choice of tenant. To illustrate this, Liverpool is a thriving city with a population increasing exponentially, a multitude of new districts are reshaping the city such as the Baltic Triangle, providing an extensive choice of urban hubs suited to young professionals seeking city living quarters. The cultural hotspot is receiving a major injection of cash investments to revitalize the region, boosting the regeneration across the city that are moving upwards with demand as potential residents are attracted to the successful areas bubbling with diverse opportunities.
Research your Rental Income and Price Growth
Property investments present as one of the most lucrative opportunities as they are the only asset class that provide two different types of returns on investment. When researching upon which investment type suits your needs the most, it is important to consider three crucial components – low property prices, high rental yields and maximum opportunity for capital appreciation – which reinforces the importance of choosing the right location!
For residential property, a rental yield of at least 7% over time is considered a healthy return, whereas student property sets the bar slightly higher at around 8%.
Ensuring your investment increases over time is crucial, and the location holds most of this power. However, you must be careful not to over commit yourself as cities like London often promise periods of rapid growth and fail to deliver, therefore it is important to be realistic and keep your potential tenant in mind – can they afford it? Property prices may be too high in the first instance for a certain calibre of tenants so be sure to strike the right balance between predicting price growth and how affordable your property is for its occupants.
How much do you want to be involved in the process?
If you envisage yourself owning a completely hands-off investment, you have the assurance your property is handled by an external management company who provide you with complete ease, but this comes as a cost. Perfect for overseas investors, paying a management fee is beneficial as they may not be there if anything was to go wrong.
Alternatively, a ‘Do it Yourself’ approach proves less costly but comes with more responsibility, although having control over your own property is a preference for many.
RW Invest, investment specialists based in Liverpool, provide a diverse array of buy to let opportunities across numerous property hotspots throughout the UK that are predicted to flourish due to ambitious regeneration schemes changing the country’s skyline.
No Comments