Ignore investment property fundamentals at your peril
Conflicts of interest in property research could damage your wealth. It’s also important to note that some investment property research simply doesn’t go deep enough, and misses whole pieces of the puzzle. When our research team analyses the best areas to invest in for its investment potential, we look at 108 data points. These cover all the property fundamentals that determine how an investment property will perform over the years.
In this investment blog, you’ll learn what these property fundamentals are, how they provide the fuel to sustain long-term investment property profits, and what questions property research should answer.
Shops and leisure
Tenants and home buyers want local amenities. They don’t want to live in a desert, miles from the nearest shop or restaurant. The apartment complex in which you’re buying a property could be the most luxurious ever built, but if there are no amenities for ten miles, then forget it as a property investment opportunity.
These are the types of questions that should be answered:
- Where and what is the closest town to the property?
- Where and what is the nearest major city? How far away is it?
- Where is the nearest park?
- Where is the nearest cinema?
- Where is the nearest gym and leisure centre?
- Is there a major supermarket nearby?
- What are the local schools or universities like?
- Are local, national and international transport links any good?
- Is there a local convenience store selling bread, milk and newspapers?
Schools
I’ve known people to move from one area to another, simply to get their child into the catchment area of a good school. The closer the schools are, the better they are, and the more of them there are, the higher the demand for homes will be.
These are the types of questions that the research should answer:
- 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
Lives seem to be getting busier, yet people want more time to enjoy themselves. They want to live close to where they work, in a central location, and with good access to railway stations, public transport, and major road links. No matter how beautiful or full of character the area might 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.
These are the types of questions that the research should answer:
- How close is it to major transport links?
- How easy is it to get to the nearest major conurbations?
- Which are major roads and motorways within ten minutes of the property?
- What is the nearest airport?
- What are the closest mainline rail or tube stations?
Major employers
The best places to invest in UK property benefit from plentiful employment opportunities, across the spectrum of employers from large to small. Lots of jobs help to keep an area thriving and vibrant. People want to live in an area that offers good job prospects. Void periods will be minimised, and demand will feed through to rental prices and property values.
One caveat here is to beware of an area that is dominated by a sole employer or industry sector. You only have to look at how Detroit was decimated when the car industry collapsed, or what happened when the coal mines closed down in Yorkshire in the 1980s to see the potential downside.
These are the types of questions that the research should answer:
- What large organisations are based in the area?
- Do any major corporations or businesses have plans to move into the area?
Major investment (regeneration)
Large scale investment covering several elements above is called regeneration. It's the property fundamental that has the most dramatic and long-term impact. It contributes to the capital growth of property in the area and can change an area forever. Regeneration makes properties more tenantable and encourages new businesses into the area. Regeneration and major investment is not about the local pub being refurbished. It’s about new shops, schools, public transport and roads.
These are the types of questions that the research should answer:
- What new developments are planned?
- What money is committed to major investment in infrastructure?
- Has planning permission been given?
Always invest with property fundamentals
I can’t stress this enough: always, and only ever, invest in property where the fundamentals are in place. It’s the whole basis of ‘location, location, location’. Sure, some people want to live miles from anywhere, in hobbit hole (like Yury in Russia), but these are very few and very far between.
If you’re considering a property investment opportunity in an area that doesn’t benefit from all the property fundamentals, well, let me just say that it’s not an opportunity – only an opportunity to lose money.
In my next article, I’m going to examine the seven elements that help shape the general property market through the property trend cycle. In the meantime, why not contact one of our team +44 (0)207 923 6100 today on, ask about our property investment research, and discover why our 108-point due diligence process is so unique?
Live with Passion
Brett Alegre-Wood
