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The 7 Steps to Finding The Best Property Investment Area

24th Jun 2021

Category: Property advice

Researching your property investment area can be overwhelming! Having so much information readily available at your fingertips is fantastic for remote research but you can end up with information overload. So, let’s simplify it: Researching your ideal property investment area is all about narrowing slowly down from the big picture to the finer details. Follow these steps and ensure you’re being as thorough as possible at each stage of your property investment area research and you’ll be off to a great start!

1) The Big Picture

Getting started is often the biggest hurdle to finding the best property investment area! You might be surprised to hear that the first stage actually has nothing to do with directly researching your investment area. If you’re trying to jump straight in to area research without having a clear plan for your investment strategy you’ll be lost before you start. Exit your Rightmove and Google maps tabs right now, step away from the laptop, and go back to the drawing board! What is your investment strategy? Ask yourself questions like what type of tenant and rental property am I looking to target? How much capital am I looking to leverage? Is this a short term or long term strategy? The answers to these questions will be at the centre of every step in this process.

Investment strategy is probably a whole other blog post topic, but if you have questions about forming your investment strategy we’d love to discuss with you in the comments!

2) Use Online Resources to Gather Information

Once you have your investment strategy, you can start to get a feel for a few different local markets. How quickly are properties coming off the market? Are sellers dropping their prices to get their properties sold? What are local yields like? What’s rental demand like and are rental prices growing? You can get a great feel for a property investment area by using one of the many online tools to help gather data.

Some of our favourite tools for gathering this information:

  • Rightmove House Price Index
  • Sign up to Rightmove investor newsletters
  • ARLA PRS report
  • Rightmove rental index
  • Sign up to local agents' investment newsletters (we have one covering Nottingham).
Rightmove House Price Index

3) Narrow Down

Once you know your investment strategy and you’ve found a few wider search areas it’s time to start narrowing it down. By now you should have a few favourite cities to do some deep dive research in to. The most important question to answer about these areas is, is there enough stock in this area to match my investment strategy? If you want to invest in a certain type of property there’s no point in spending time researching areas where they simply don’t exist!

How to narrow it down:

Figure out your main criteria then use property portals to set a wide search area matching that criteria. For example, if you’ve decided investing in an apartment would be the best strategy, set a search for 1-2 beds, up to £120k, with parking etc. Then set a wide search area, for example you might look at the whole of Nottinghamshire, or Nottingham City centre + 3 miles. You can then scroll through the list of properties available and take a note of the areas that keep cropping up. It won’t be long before you notice a trend!

4) Know the Law of the Land

A research point that is often overlooked is to consider the local housing laws and regulations. This is important for 2 reasons: Firstly, are there any local laws or regulations that could restrict your investment in an area? For example, in Nottingham an Article 4 direction covers much of the city which prevents the conversion of family homes to HMOs. The last thing you want to do is purchase a property with a plan to convert, only to be told you can’t!

The second reason this is important is for the future profitability of your investment. Don’t just consider the current local rules but also research what the council’s plan is for the local area. Take a look at their website for documentation on their Local Plan, which should give you a good idea of the future of the area and the long term impact this could have on your investment.

5) Talk to local landlords and agents.

At this stage you’ll be ready to start getting in to discussions with other people about the local area. Find out from other landlords what their experience of investing in the area has been by starting discussions in Facebook groups, or reaching out to people directly on social media (search local hashtags to find the relevant people). Local letting agents should be experts on their areas and will be happy to provide guidance. For more in depth advice search for agents who provide a specialist consultation service.

Key Questions to consider asking:

  • What are tenants in x area looking for right now?
  • Are there any roads to avoid in x area?
  • What is the current rental demand in x area?
  • Are there any Council restrictions to be aware of in x area?
Rightmove House Price Index 1

6) Visit the area

With the huge amount of information you can now find online it’s easy to fall into the trap of thinking that everything can be done remotely. However if you’re serious about investing your hard earned money in to a specific area you need to visit in person to get a real feel for it. Everyone’s perception is different and areas which one person might consider a nice place to live, could be different to how you feel when you visit. Have a drive around the area with google maps at the ready. Make a note of any areas you particularly like and dislike, because they’ll all blur in to one when you get home!

7) Delve into the Detail

The final stage is to get in to the detail of the specific areas you’ve pinpointed. Ensure you re-orientate your search around your investment strategy and decide what is important about an area. If you want to target a family home, what are the best schools in the area? If you want to let out to young professionals, would the local amenities appeal to this demographic?

At this stage you might also consider researching rental valuations for specific properties- you can use our instant online valuation to help with this!

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