The old cliche of ‘location, location, location’ still holds true when you invest in property. Where you choose to invest dictates the success of your asset but provided you’ve done the research, you stand more chance of maximising your return on investment.
As you’d imagine, we understand that investing is overwhelming – there’s enough to consider before you even think about where and what you’re investing in. That’s why we’ve created the ultimate checklist of what to look for when you invest in property.
8 Things to Look For When You Invest in Property
Whether you’re looking at where to invest or what to invest in, it’s critical to perform all of the necessary due diligence. Ultimately, you’re looking for all of the things that attract tenants and ensure they stay for as long as possible. So, what are the top 8 things to look for when you invest in property?
1. What does the surrounding area look like?
First impressions mean a lot when you’re holding tenant viewings. Ideally you’ll want to invest in property that has great surroundings – whether that’s plenty of green space, fantastic views of the surrounding landscape or nearby amenities.
Waterfront properties are often exceptionally popular for this reason because they look attractive and typically represent more desirable surroundings. Likewise, apartments on higher floors generally have great views which are popular with tenants.
While you can’t necessarily control the surrounding area, it should be a definite consideration when you’re looking at where to invest as 20% of tenants often move in search of a better location or neighbourhood.
2. How far away are basic amenities?
You might have found the ideal property in a great location but if there’s no amenities nearby you’ll struggle to encourage tenants to live there long-term. This is less of a problem in a city-centre investment, for example, but you’ll still want to think about what’s in the general area and whether it’ll serve tenant needs.
Good things to consider are supermarkets, pubs or bars, restaurants and most importantly, transport links. The 2023 JLL Tenant Survey suggests that 67% of tenants would pay a premium for being close to public transport links, which only highlights the importance of this amenity.
Older data also suggests that properties near transport links often appreciate in value faster than those further out – it’s estimated that properties under a mile from a train station are typically worth 15% more.
3. What plans are in place for the local area?
As an estate agent in Birmingham, we understand the power of ‘regeneration’ more than anyone. The recent success of the Birmingham property market is driven by a systematic program of redevelopment that has lasted over two decades. Over the last 20 years, the city has built more amenities and improved the overall quality of life, attracting better employers and thus, more ambitious tenants with more disposable income.
If you’re looking to invest in a certain area, take the time to research planning proposals or redevelopment projects that may improve the local area in the future – this will likely have some impact on capital growth and rental returns from the asset going forward.
4. How is the local market performing?
While we’re on the subject of capital growth and rental returns, it never hurts to take a look at how the local market is performing prior to investing. While it’s not always a 1:1 comparison, it will give you a ballpark figure of what to expect which may impact your choice to invest.
You’ll want to consider how much prices have increased or decreased over recent years and also what rental properties are currently commanding in the local area. If you’re struggling to find this information, you can take a look at expert research such as our piece on the best places to invest in Birmingham.
5. What type of property is suitable for you?
This is an important question to consider from the beginning – what type of property are you investing in? The answer to this question is usually dictated by three key aspects: what is available in your chosen location, what property suits your investment strategy and what fits your budget?
Budget and availability are generally less easy to control but the property you choose to leverage for your investment is a key choice you’ll have to make. In competitive markets, such as Birmingham, you’ll have a wealth of properties to choose from and you’ll want to go for something that suits your investment strategy.
Are you looking for a one-bedroom apartment that suits a single, young professional or student and is likely to have regular turnover? Or are you after a three-bedroom apartment that is rented by a professional couple over the long-term? Both have their own merits and it depends on how you approach your investment.
It’s always a good idea to research this as much as possible because your investment strategy often dictates many other decisions you’ll have to make further down the line.
6. How much demand is there for rental accommodation in the area?
A great way of estimating the long-term success of an investment is by looking at rental demand in the local area. If you know that there’s a range of rental properties nearby but you never see them ready to let for long, you have a clear example of rental demand that may translate to your own investment.
You’ll want to take this approach as early as possible during your research so that you have a larger sample size to go from. Likewise, consider speaking with property experts that might be able to offer deeper insights into the market.
At the same time, consider how the local demographic meets your investment strategy. If you’re looking for young professional tenants that are more likely to rent, you’ll want to avoid areas that generally have an older population as demand is likely low. It’s relatively easy to get a feel for which demographics gravitate to where by leveraging information about local neighbourhoods online.
7. What amenities does the development have?
This is a question that applies more to apartment investments – particularly developments in city-centres that typically integrate a wider range of amenities.
The most important amenity by a large margin is internet speed. Around 93% of tenants in the JLL survey highlighted broadband speed as a priority in their next rental, meaning you’ll want to enquire about this utility as part of your research. Other tenant priorities include:
93% – Broadband speed
91% – Energy efficiency
70% – Private outdoor space
66% – Onsite concierge service
57% – Onsite leisure facilities (gym or pool)
50% – Parking facilities
This suggests that if a development has great broadband, is relatively energy-efficient (which most new developments are), offers some form of outdoor space and a concierge service, it’s meeting the four primary tenant concerns and will be popular.
Other facilities, such as co-working spaces, gyms, leisure facilities or private dining areas, are typically seen as a bonus and make your asset much easier to market.
8. Are you investing with quality partner support?
The final thing to consider when you invest in property is who you’re working with. You’ll want to properly research the developer of the asset (especially if you’re investing off-plan) and any property investment or property management companies you work alongside.
Take the time to research their track record, how they’ve performed in the past and the experience they have in the local market.
If you want to know more about investing in UK property – especially in the Birmingham area – you can enquire with our knowledgeable, experienced property investment team today and learn more about the incredible opportunities available across the city.
