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Successful property investment isn’t something that happens overnight.

Successful property investment isn’t something that happens overnight.

Successful property investment isn't something that happens overnight. It requires a great deal of trial and error to find your feet with an investment strategy, a lot of which comes from due diligence at the start of the process. In this article, we will look at what landlords need to consider when investing in new areas.

The chances of blindly leaping into the property market with expectations of immediate returns on investment, whether from a buy-to-flip or buy-to-let asset, are incredibly slim. Being a successful property investor requires trial and error with your strategies and targeted investment areas. There are mistakes to be made and learnt from, and an extensive amount of time spent planning and researching.

When assessing a property to see if it meets your criteria, it is beneficial to do this as a systematic procedure that can be replicated as a template for each deal you are researching.

There are external factors from each property you add to your portfolio; however, that can determine the success and return on investment.

To achieve returns on your investment, then there needs to be demand. Having a vacant property spinning endless void periods due to little demand from prospective tenants is counterproductive to your assets.

While the rental market remains buoyant in the current climate, and there is an overall demand from prospective tenants, there are still considerations to make when expanding your property portfolio to attract the best long-term tenants swiftly.

To do this, you need to be highly aware of the areas you are investing in, not just individual properties. A property can be refurbished/tailored to meet a desired standard at your own pace, but the development or current circumstances of areas will be out of your control.

What aspects of an area do property investors need to consider?

1. The population.

The current population of any given area is a solid indicator of the type of tenant you will be looking to source for your property.

Investing in areas close to town/city centres with excellent commuter links means you are more likely to secure working professionals for tenants, whereas investing closer to local schools is an attractive option for securing long-term family tenants. 1 You should strive to carry out a full analysis of the demographics of the local population in the area you are looking to invest in. Areas that show promise in future population growth are also ideal targets for investment areas, as it will guarantee you further prospective tenants down the line.

2. The economy.

The drivers of the local economy in the area are also important factors. You should seek to find out who and what is powering the area in terms of employment, growth and the economy. Areas with high profile employers are great for the local economy and a great source for prospective tenants.

In addition, you should also conduct research on whether or not there is readily available support for local businesses from the council or from the Government.

3. The developments.

A report by the Guardian shows that England's poorest neighbourhoods have the biggest lack of social infrastructures, such as parks, community centres, pubs, shops and sports facilities.

Eight of these wards had no shops within the neighbourhood or within 1km of the local area, while three had no public parks, gardens or playing fields. These "left behind" neighbourhoods with very few developments or amenities are unlikely to be attractive to bringing new prospective residents to an area.

Property investment is a long-term commitment as opposed to a quick win strategy. When researching areas to invest in, you should look to the long-term future to see what developments have been planned (if any), who is funding them, and their track record on delivering.

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Development is a guarantee of the growth of an area. It gives the current population reasons to stay, and also acts as a driver to bring new residents to the area; thus increasing housing demand and securing prospective future tenants for your investment properties.

4. The affordability.

Assessing the earnings of the current population in any given investment area is critical to understanding the affordability of prospective tenants. If you are investing in properties well out of the affordability bracket of the local demographic, then your property will amass unwanted void periods.

Ideally, you should look to invest in areas where achievable rental figures are one-third of the median population income.

5. The environment.

The area and its environment should play a huge role in selecting where to invest. There are many other considerations to make, such as risks posed and ease of accessibility. Areas which are at risk of flooding are likely to deter many prospective tenants away, risking an increase to void periods of any properties you purchase, as well as remedial damage costs.

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One major question to ask is how accessible is the area you are investing in? Does it have substantial transport links with great connectivity, or are you looking at a rural location only accessible to those with cars? Well connected areas with expansive transport links are considerably better for long-term investment strategies.

Other components to research and assess, particularly in the wake of a pandemic which has shifted our working nature to working from home, include internet speeds. Fast internet has always been a priority for some tenants, but this has been enhanced as the need/possibility of working from home has increased.

Crime rate is another factor to consider when choosing an area to invest in. High crime rates can not only deter prospective tenants away from your property, but you could also find your investment property subjected to criminal damage or malicious usage.

Having a dedicated, systematic approach to property investment will allow you to carefully research ideal areas with great yields and high ROI. The process will undoubtedly be time-consuming, but this is important to ensure you get the best results that you and your property portfolio deserve.

Suppose you are looking to save time and earn a passive income from your property. In that case, it is worth looking at the expertise of a managing agent who can help determine where to invest, where to avoid and find the ideal tenants to generate your rental income. Why not contact a member of the Griffin Property Co team and find out how we can help take back control of your time whilst maximising the returns of your rental properties and portfolio?