Research – the foundation of successful investment property portfolios
Research is the foundation on which successful investment property sits. Just like when you build a house on sand, if you build a portfolio without properly researching property investment opportunities first it will crumble, fall down, lose value, and cost you money. So it's vital to gather these research questions to ask before you invest in property.
In this article you’ll learn some of the questions to ask before you invest in property or when assessing the investment potential of an area in which you are considering buying property.
First, investigate the area’s history
It’s important that you know as much about the area as possible – not just its present and future, but its past as well. There may be reasons why, historically, it hasn’t been a popular residential area, so what questions to ask before you invest in property?
You should also analyse the area’s social and financial make-up. Remember your investment aims: to attract quality, reliable tenants who are going to rent your property and pay on time. So, take a good look at factors like the social mix, credit ratings, and average house prices locally. This all helps to build the big picture.
Sample questions to ask before you invest in property:
- What is the area’s history in brief?
- What is the average price history of properties?
- How affluent is the area? Is it rich, poor, or middle-income?
- What type of residents lives here, e.g. retired, students, white-collar, blue-collar?
- What are the credit ratings locally?
Second, let’s look at the area’s prospects
This is about what investment is happening in the area and what is likely to happen over the coming years. Focus on the ‘budgeted for’ investment – once budgeted, you can be more certain that the money will be spent, and the investment made. ‘Planned’ investments don’t have the same level of commitment.
Sample questions to ask before you invest in property:
- What plans does the local authority have for the area?
- What plans does the national government have for the area?
- What plans do private investors have for the area?
- What plans are budgeted for, and what is just planned?
Now, let’s look at the investment property fundamentals
There are five major fundamentals that will determine an area’s value (both in price and rental) and growth potential. These are shops, schools, transport, major employers, and major investment. In my next article, I’ll look at major investment – it’s such a pointer to investment property potential that it deserves its own space. Here, let’s discuss the first four property fundamentals.
Shops (and leisure amenities)
This is about attracting people to the area; not just tenants, but homeowners, too. You need to understand the area where your investment property is located.
The chances of you successfully renting out your investment property are going to be severely diminished if that property is in an area that has no amenities. A developer may have created an astonishing apartment complex with each apartment benefitting from top-of-the-range fixtures and fittings, but if there are no amenities within ten miles – no convenience stores, pubs, parks, gyms, restaurants, supermarkets, etc. – who is going to want to live there?
It’s vital that you check out the existence of local amenities and make sure your investment property is in an area in which people are going to be able to conduct their day-to-day lives.
Sample questions to ask before you invest in property:
- What is the closest town with a population of 50,000 people or more?
- What is the closest town to the property?
- What is the nearest major city? How far away is it?
- What is the area best known for?
- What landmarks and sights are in the immediate vicinity?
- Where is the nearest park?
- Where is the nearest cinema?
- Where is the nearest gym and/or leisure centre?
- Is there a major supermarket nearby?
- Is there a local convenience store selling bread, milk and newspapers?
Schools
This is fairly self-explanatory. Families are attracted to good schools (public and private, primary and secondary). The closer they are the better, and the more in the area the better.
Sample questions to ask before you invest in property:
- Is there a primary school nearby?
- Is there a secondary school nearby?
- Is there a university nearby?
- Is there a library nearby?
- Are there any schools that have an above-average reputation?
Transport Links
People want to live within easy distance of where they work. They want to be within a central location. Good access to railway stations, public transport, and major road links will be a major draw for professional tenants.
Remember, you aren’t taking part in an episode of ‘Location, Location, Location’. No matter how scenic or full of character the area may be if the development’s location makes the job of travelling to and from work difficult, it is going to be a turn-off to potential tenants.
Sample questions to ask before you invest in property:
- How close is it to major transport links?
- How easy is it to get to the nearest major conurbations?
- Which major roads and motorways are within ten minutes of the property?
- What is the nearest airport?
- What are the closest mainline rail or tube stations?
Major Employers
An area needs to benefit from plenty of employment opportunities. This includes large employers and small and medium-sized enterprises. Lots of jobs help to keep an area thriving and vibrant. People will want to live in an area that offers good job prospects, and this alone will keep your vacant periods to a minimum: there will always be a sufficient demand for housing. This demand will not only feed through to price increases but also to the rent that you are able to charge.
Be wary of large employers or industries pulling out of an area, though. In the United States, when the car industry collapsed in Detroit, property prices were decimated in the city. The same happened in the coal mining areas of the UK in the 1980s: areas that are dependent on a single company or industry are riskier than those with many employers from several industrial sectors.
Sample questions to ask before you invest in property:
- What are large organisations based in the area?
- Do any major corporations or businesses have plans to move into the area?
In-depth research takes time. It can be hard work. You need to know where to look, what questions to ask before you invest in property, and how to find the correct information in the age of fake news and false promises. Fortunately, we’ve done all this for you. To discover more about our property and area research, get in touch with Gladfish on  +44 207 923 6100. It’s the foundation on which hundreds of successful property portfolios have been built.
Sick of your Property agent not responding, or truly managing the changes in the market going on right now then give us a call 01522503717 or www.ezytrac.co.uk
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Brett Alegre-Wood
