What to Look for when Searching for an Investment Property in London
Whether you are a first-time buyer or an experienced property investor, London is an area of the UK that is always going to be a popular investment choice. Despite the COVID-19 pandemic, thousands of people are still working in London making investment properties here a lucrative choice. With everything that the UK capital has to offer, it should come as no surprise that there is still an increasing number of people from all over the world who are interested in living there. London is home to a wide and varied range of different, unique properties with something available at every price bracket in the thirty-two boroughs and forty-eight neighbourhoods.
It goes without saying that before you begin any new property investment venture, getting clued up on the basics is a must. It’s also important to be aware of exactly what you are getting into when it comes to risk. Like any business venture, property investment comes with a certain level of risk, so it’s important to make sure that you are prepared.
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Research Properties for Investment
The first thing to do to minimise the risk of your investment being adversely affected by negative fluctuations in the property market is to make sure that you spend enough time researching the market in detail. The good news is that purchasing a property in a hotspot such as London will usually reduce the likelihood of a risky investment. It’s also worth finding out more about any regeneration that may be set to occur in the area where the property is based, since this could boost further growth and increase rental yields or selling prices.
Find Good Areas for Investment Property London
When done right, investing in property can be one of the best ways to maximise your income and savings. However, to get the best results, it is important to get a solid understanding of what makes a good investment opportunity. Rental yields is one of the main things to look out for – this refers to a percentage figure that property investors use to determine how profitable a buy to let investment is likely to be. Investing in property with a high rental yield is likely to make you more money from your investment. Ideally, a good property investment rental yield is anything more than 5-6%. In London, there are various areas where rental yields are more than 8%, which are considered to be some of the most lucrative.
Location is one of the main things to consider when you are investing in property. Researching different areas is one of the key pieces of property investment advice that you are likely to come across as you learn more. You should pay attention to rental yields and property price growth in the areas that you are researching. While the entire UK has seen consistent house price growth over the past couple of years, with record highs hit in 2021, some areas of London have house prices that are growing faster compared to others.
If you are interested in a buy to let investment, it is also important to invest in a property in an area that is considered to be a rental market hotspot. In London, areas that have high populations of students or young professionals tend to be the best option for investment if you want high rental demand. Larger properties close to universities or good transport links into the main areas of the city where people go to work are often great investment options as homes of multiple occupation become more popular, particularly among students and young professionals in London.
Screen Tenants for Rental Investment Homes
Once you have found a property to invest in, it’s important to reduce the chance of getting bad tenants by conducting a thorough tenant screening. You can do this on your own or use the services of a property management company. Tenant screening involves checking employment history and running credit checks so that investors and landlords can be aware of any financial issues that might pose a problem in the future.
Prepare for the Risk Involved with Investments in London
Whatever your reasons for investing in property in London, it is important to ensure that you are actually ready to invest. Whether you are considering investing in buy-to-let property or want to purchase property to sell on in the future, one of the main things to be sure of is that investing in property makes financial sense for you right now. You should be comfortably able to invest. Along with this, it’s important that you are prepared to do the research before getting into investing. You will need to commit a significant amount of time to researching the property market in depth, staying ahead of property news in London and staying on top of market trends to make sure that you are getting the most from your property investment venture. Finally, you may not be ready to start investing in property if you are not ready to accept the risks that can be involved with property investment.
Different Strategies for Residential Investment Property
If you want to invest in property in London, there are several different strategies available that you may be interested in. If you are new to investing, it is not always easy to determine which one might be the best option for you. Some of the most popular investment strategies include buy to let and buy to sell.
Buy to Let:
Buy to let refers to an investor purchasing a property to rent out and earn rental income. It can be an ideal way to make large amounts of money over time. Along with this, the rental market is currently thriving, meaning that there are lots of amazing property investment opportunities available for investors who want to get into buy to let. It’s one of the best investment options for profitability as you can make two types of rental return through rental income and capital growth.
Buy to Sell:
Buy to sell is a strategy for investors who are interested in purchasing property to sell on for a profit. This may be the ideal strategy for you if you have money to spend on renovating properties and adding significantly to their value.
Off-Plan Houses for Investment
You may or may not be familiar already with the term ‘off-plan’ property. Off-plan properties refer to properties that have not yet been built but are available to purchase. They are usually still in either the planning or construction stage. Since off-plan property investment offers a range of benefits, it is becoming more and more popular. However, some investors find that investing in a completed project is a better choice for them. Some of the main benefits of investing in off-plan properties include:
Potential to Save Money:
Off-plan property developers will often list their properties at rates below the market value, meaning that you can often get a great deal with this type of investment.
Attract More Tenants:
If you want to purchase buy to let off-plan properties, you may attract more tenants since people tend to prefer new-build properties. This is due to their modern design and the fact that newer properties tend to be eco-friendly, which can increase the demand for them.
Maximise Capital Growth:
Buying an off-plan property could mean that by the time the build has been completed, the property may have already grown in value and be worth more than the price you paid for it initially, making it ideal for buy-to-sell investors.
Finding the Ideal Tenants
When figuring out what to look for when investing in buy to let property in London, one of the most important factors is identifying your ideal target tenant. Once you have a clearer idea of your ideal tenant, it will become easier to identify the best investment property for you and help you get closer to a successful investment. Students and young professionals are some of the most popular tenants for investment landlords in the UK.
Students:
Renting to students is a popular option in the UK, especially in areas close to key universities. Students often make good tenants as there is a high demand for student accommodation, and since most students get loans to help them pay for the cost of living while at university, they are more likely to pay their rent on time and avoid any issues.
Young Professionals:
Young professional tenants tend to be the main target for investment properties. This is due to the fact that the rental market in the UK is dominated by young people who live and work in UK cities. With more young professionals struggling to buy their own homes due to rising house prices, there is currently a high number of young professional renters contributing to high demand.
When it comes to investing in London property, there are various areas and property types to consider. Carefully research your options and the property market to determine the best things to look for when finding your ideal London investment property.
