Research, research, research!
Taking the time to find the ideal property investment for your needs will pay off.
Here are some ways you can research the area of your potential property investment:
• Talk to local estate agents to find information on the area, house prices and rental prospects.
• Research social demographics. For example, the divorce rate is increasing, leaving many single householders looking for somewhere to live.
• Supply and demand. Over recent years, there has been a marked lack of housing supplied by government. This is likely to be the reason for house prices increasing.
• Research the local economy. You want to know whether the area is up and coming. You can ask the local authority planning department for information on how many new homes have been built in the area, and how many are projected. See if there is an increasing business sector growth in the area, as this is a good indication of an area worth investing in.
• Think about what people want. For example, affluent couples and young professionals without children generally like city centre apartments in stylish areas where they can spend their money. Families, on the other hand, gravitate towards successful neighbourhoods with good schools, transport links, parking and green space.
Thinking ahead
The basic tenet of investing in property and property development is to buy low and sell higher. So, you need to look at properties that can be feasibly resold for profit, whether you choose to rent in the meantime or not.
Here are some ways that could help you achieve a profit:
• Cosmetic improvements – a property that needs just minor improvements to increase value. Sometimes, relatively small decorative improvements without involving architects, planners or professionals, can boost the value.
• Property conversion – this sounds relatively simple in principle. Buy a house, convert it into flats and sell the individual apartments. However, it’s a complex transaction that will require careful budgeting and planning. It could be a risky investment if you’re thinking about investing all you have in a property conversion. If done successfully, then it’s possible to get a decent return, but there are many costs along the way that this can’t be guaranteed. It can be more profitable |to convert apartments back into a house. Either way, planning consent is needed.
• Change of use – the most important thing to be aware of if you’re looking at a property that you want to fundamentally change the use of (for example, a pub into apartments), is that you shouldn’t buy on the proviso that planning permission will ‘probably’ be granted later. Usually this isn’t possible, as deals are completed when planning permission is granted – if a vendor will only consider selling on an unconditional basis, that is without guaranteeing planning permission, then the deal should be shelved or left to professionals.
• Building regulations – whatever type of property you’re looking at, and regardless of the level of conversion you’re planning, you need to fully understand building regulations.