In property investing, location is everything. Whether you are solely focused on just buy-to-lets, full time on serviced accommodation (airbnb) or open to all strategies, the area that you are choosing to invest into can dictate whether you are going to have a cashflowing asste that will put money in your back pocket each month and appreciate over the decades, or whether it will end up costing you, not just financially but also emotionally. You can avoid a lot of headaches and stress in the long run so long as you are smart (and use common sense) with regards to your investment area.
For example, you would rarely ever decide to start investing into a buy-to-let in London since the yield is so low (yield in property indicates the amount of cash flow you are likely to receive each month), yet in places like South Wales and the North East of England you would gravitate towards those areas for your simple, cheaper, cash flowing buy-to-lets as the yield can be over 8% typically.
On the flip side to that, you would rarely ever decide to invest in Lease Extensions (if you do not know what this is, it is where a property has a short lease period remaining on it, so you are able purchase the property at a discount, extend the lease, and then you have a profitable investment with equity sat it). Due to the high prices of property in London, you would always do lease extensions in places such as London as they make the most sense.
So, now the best bit. How do YOU choose your investment area for maximum returns and to make the best use of your money so it works harder for you? The answer ties into the comments made above.
The first thing to do is start with a plan of what you would like to do in property and where you wish to be. For example, do you want a simple, as little hassle free as possible portfolio of 10 buy-to-let properties if you have a starting capital of lets say £120,000? Your answer would be South Wales, for example. Also, if you had a smaller starting capital of lets say £40,000, it is still possible to make that first investment to begin your property portfolio beginning journey.
Once you have figured our where you would like to be in 5 years (“I want ‘X’ amount of cash flow and ‘X’ amount of properties and it to be totally hands off and as passive as possible”), then you get in contact with someone like ourselves. We exist to be area experts so that we can guide you to find out exactly which area would fulfill your needs and requirements and, as marketers, we are able to find that exact property investment for you in the relevant area. Bear in mind that we do a client breakdown consultation call with all of this for our clients anyway at the beginning for full transparency.
So, you know your long term plan, you know how much capital you have to spend, and you know the general area you wish the invest. The next thing is specifics. Do you wish to invest in a serviced accommodation, buy-to-let or HMO?
For all of these strategies you will require some due diligence of the area. Is there adequate parking, local amenities and shops? For a buy-to-let you need to ensure that there are also transport links and job opportunities close by, whereas with serviced accommodation you are targeting more tourism based areas, as you will have short term guests. You base your investment on your target guest/tenant.