As the market warms up with the potential influx of millions of 55 year old pension holders emptying their pots and flooding the market – you need to be prepared to resist the predictable buy frenzy. Property is unemotional and so should you be. Clear decisions following a clear strategy lead directly to financial freedom – any other paths will be fraught with undue stress!
1. Buy for the right tenant
Investing is a business and must not be confused by emotions. Choose a property that suits the tenant you had in mind. Letting agents can explain local preferences. Tastes in the South are not the same as tastes in the North. Think about whether a garden, parking, local schools or public transport are the deciding factors for your tenant.
2. Parking is a major consideration
With more and more councils using parking permits as a way to “manage street congestion” or raise income, parking is becoming an issue. Does the property have off road parking, a limited number of parking permits or will there be a charge. Arranging this in advance makes it easier for a tenant to decide to rent.
3. Check the neighbour’s garden
Always look out the back window of a property you are viewing. Check out the neighbours gardens. I have seen miniature Shetland ponies and the life of grime! Think whether your tenant type (NOT you) would be happy living next to the potential neighbours.
4. Visit the area and take a walk through the streets day and night
Never rely on desk research or word of mouth alone. Check out an area for yourself. Unless you are working with a local expert (highly recommended) you must get a “feel” for an area. Again remember to view the area and properties while “in the character” of your prospective tenants.
5. Avoid structural issues unless you have trade experience
Know which repairs will put off the novice investor or residential buyer and which you need to avoid. Damp in a house can be ground up (new damp course and a lot of work) or on external wall caused by gutters (this is easy). Cracks in walls can be harder to judge, you will need experience to tell movement from drying plaster. Before investing get a builder to give you a price on any significant repairs.
6. Check the electrics
You will need to consider two things. First whether you need to replace (rewire) the system which is expensive and secondly if the property is on a card meter. Benefit tenants and some lower income families will need card meters to manage their bills, while properties designed for professionals or sharers will need a normal bill meter. This can take weeks to arrange!
7. Check EPC rating
Energy performance is monitored on a rating scheme and you will be given a copy of the certificate. Check this in advance as new legislation will make some properties un-rentable in 2016 onwards if they do not meet a minimum standard.
8. Will a new kitchen make all the difference?
When you enter a property for the first time think whether a new kitchen or bathroom put in at the point of purchase would increase the rent-ability of the property. It is much easier to renovate a property before you start the renting cycle rather than manage repairs, maintenance and voids afterwards.
9. Check out the street
Always come back out of a property and check out the street. Look at the age and types of cars. Look at the cleanliness of the street. Check out the bins situation. You can start to understand the type of people that live in the area. Consider and then do research to confirm if the area is heavily rented or a mix of owner-occupiers and what that means for your rental strategy
10. Beware the flats!
If you have to invest in flats be very careful as not only do service charges impact on your profit, but location becomes even more crucial. Beware of city centre flats and big blocks as your value and rental income will be determined by those around you (you cannot differentiate a flat). Check communal areas, particularly the post area as this can tell you a lot about the management company. A messy and dirty communal area will put off tenants before they arrive at your front door. Messy and dirty communal areas mean poor tenants and a bad management company so now walk away!