In fact, the ripple effect is responsible for many areas, particularly around London, going up in price.
But did you know that there are ways to work this phenomenon to your advantage? One of them is using my very own called Ripple Effect Pentagon.
The term 'ripple effect' refers to a wave of rising house prices from a central point of high activity. These areas have the best property investment fundamentals, which keep demand, and prices, high and they ripple out from there.
Obviously, not everyone can afford to buy in these 'best' areas. Research by the National Housing Federation released in February showed that Londoners would need a 266% pay rise to afford to buy a property in the capital.
Moving out along the 'ripple' to where you can afford.
As a result, many investors and homebuyers look to further out to buy. An example is that London Zone 1 and 2 have the best fundamentals, that's obvious, they are the most expensive and closest to central, including all the transport, schools, everything. Once demand and prices get too high in these areas, then people buy in London Zone 3,4 and 5, and then commuter towns and finally to Major cities with universities and Major towns. This is the ripple effect in a nutshell.
The ripple effect pentagon can be a useful tool in deciding where to place your money, and we recommend these five areas as they offer everything that you need in order to maximize your returns so you can build the portfolio that you want.
So why have we chosen these areas?
We focus on major towns with a population over 100,000 as we are looking for vibrant communities where rentals are easy to achieve and there's access to good fundamentals.
We focus on Major cities with universities, as universities and their students are great from an investor point of view as they tend to take out a lot of the lower end stock, which helps drive demand on the higher end. This is exactly where you want to be as an investor. If you are investing in specialist assets to let particularly to students, it's particularly important to have a well planned property investment strategy and that you've done your research before investing to ensure you build your portfolio in the most efficient and safe way possible.
We focus on Commuter towns which are also great for property investment as they see high demand from City workers and other commuting professionals who can’t afford to buy in London. We focus on areas that are 90 minutes away from London or less.
Why we stay clear of smaller towns and cities.
We avoid smaller areas due to the higher risk of something happening that can affect house and rental prices. For example, a small town may lose a major employer or floods could affect the area.
Hotspots are 3 to 5 years into the future... Not Todays hotspots.
We always think ahead by investing in an area three to five years before it becomes a property hotspot. This is because we want to be able to ride that wave before it’s too late. This is where the ripple effect pentagon is a great tool to have handy.
For example, if prices in London Zone 1 and 2 have shot up by 200% in recent time, it’s unlikely that this level of growth will continue for the next few years when you are looking to get returns off your investment. In this case, it would be advisable to instead put your money into a development in the next affordable area with the best property investment fundamentals where prices haven’t gone up too much but are likely to increase in the near future.
Even if you can’t afford an area today, there’s nothing to say you won’t in the future. Buying in a commuter town or a major town with a university can generate enough money for you to eventually be able to afford a property in London Zone 3, 4 and 5 or London Zone 1 and 2.
It’s important to be flexible as an investor unless you want to create an individual plan and strategy and focus on one or two areas. Even then, it’s important to understand the ripple effect and have a strategy that meets the current market.
Once you’ve decided, based on the ripple effect and with the help of the pentagon, what type of community to buy in, it’s time to narrow it down further by taking a look at specific areas and developers by getting a hold of the Area Investment Guides that apply to that specific town or city.
Questions? The team is ready and waiting to give you help where you need it. Give our Property Consultants a call on +44 (0)207 923 6100.
They are amazing and knowledgeable
Truly inspirational. The team is available for chat and suggestions. The academy online is the place to go to have impartial news on property. They’ve also had a good deal all over the country to suit every specific circumstance. What I like the most of Gladfish strategy is the “set and forget” at the conditions it gets set right from the beginning. I would like to recommend Ryan as he is my main point of contact. They are amazing and knowledgeable.
Your success is my success
My property consultant has been very helpful and understanding of the difficult circumstances surrounding my ability to even make time to talk. He has struck a very good balance between assisting without being too intrusive. From what I have witnessed Gladfish deserves its success. Your success is my success!
Excellent customer service, professional advise, customer, follow up and post transaction monitoring by Manny
Purchase process exciting and painless
Gladfish indeed did a great job. It's not my first buy-to-let property when I met them the first time, but I've learned the fundamentals of being a property investor from them. The whole purchase process exciting and painless. The team was very relaxed (which made me relax) but responsive to my questions. Great!
Prioritises customer satisfaction
Gladfish prides itself as a company that prioritizes customer satisfaction. The team totally embodies this principle. Completely professional in their manner, open to and approachable for discussion and always available should any questions arise. A perfect example of why Gladfish has the great reputation it does.
Really helped us
Gladfish has really helped us in establishing our foundation in the property market. The people we have been in contact with have been very understanding and professional. What we love about the team is that they really work from their hearts.
Make it all possible and effortless
I have been extremely impressed with Gladfish. My situation as a first time overseas investor (from South Africa) had its challenges and frustrations. It simply would not have been possible without Gladfish! Everyone I dealt with went the extra mile to make it all possible and effortless.
Education made available
Thank you for all the education you have made available to me over the past 3 years. Reading your book now makes me appreciate this even more as you have been giving us exactly what you are now providing the public. I've been reading your material on the web, end to end, at least once a month. Reason? Because as I grow in the business, the meanings of what you say in your material changes, they grow, they become more relevant. More importantly, as I practice the principles and follow the rules, I definitely see the benefit.
Team at Gladfish always go the extra mile for their clients
The team at Gladfish always go the extra mile for their clients. I had a headache with a third party and Ryan Rahnavard supported me throughout. He did most of the chasing for me. Gladfish is a great company headed up by Brett and I hope to be a client for many years to come! Ryan patiently helped me set up my company so that I can buy property under a company structure. There are always highs and lows when you build a portfolio and I feel completely supported by Ryan and the Gladfish team. Thank you all so much for getting me this far! 10 out of 10!
Worked with my finances perfectly
Great company with a superb team and customer service! Very good selection of property investment opportunities. I spoke to Ryan, he is efficient, knowledgeable and helped me a lot to invest in property that worked with my finances perfectly, for which I am truly grateful. Would recommend this company to any investor.
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