People are always contacting and approaching me wanting to pick up tips about property investment – where to start with a HMO or buy-to-let. It’s a daunting thing to know what to do with your hard-earned money, so advice is always a good thing to seek.
One of the main concerns that I hear over and over again is what potential buyers need to look out for when picking a Medway property to invest in. Here I have rounded up the main advice I give to people.
1. Exit strategy
What are your goals for a property? Taking a HMO as an example, if you intend to have the property for a long period of time, then by all means do what’s needed to create a quality HMO: well-proportioned room divisions, en suites, proper security and so on.
Related: Should you set up an HMO business as a limited company or a sole trader?
But what if you want to hedge your bets and only hold a property for a few years? Selling a HMO-converted property back onto the mainstream market could be tricky. If you aren’t dead set in being in the game for the long-run, then making a property easily convertible back into a family home could pay dividends.
And what if you don’t need the income and you only want to lock your cash away for a long time? Then buying a low-yielding property in an area of high capital growth could be a good strategy (but that does present its own risks).
2. Target audience
Who do you want to have as tenants in your property? Deciding this early on will help answer lots of questions further down the line.
A few broad camps of potential tenants: families, students, professionals, contractors.
Related: Are you overlooking this type of tenant for your Medway HMO or BTL?
Each camp will dictate how you furnish (or leave unfurnished) a property, to what level of specification, and how much you can charge in rent owing to the standard to which you finish the property.
Students don’t need every fancy fixture going, but do need good security between well-separated rooms; families don’t need the internal security measures, but will likely look for a decent finish and quality fixtures.
It’s a tired phrase in the property game, but it’s nevertheless important: location is key.
So you know who your target audience is for your HMO or BTL, so the next logical step is working out whether your potential property is in the right place for them.
If you want to house students, is the property close enough to the uni? Finding a place within 10 to 15 minutes’ walk from the UCA in Chatham or Universities at Medway in Gillingham is a far better bet than somewhere further out. Students generally want to be able to walk to university in the least amount of time as possible – instead of relying on buses or taxis.
Alternatively, professionals who are commuting into London will much prefer being close to a station, whether that’s in Rochester, Strood, Chatham or Gillingham. Having to walk too far to get the train in the morning, or the need to drive there, will put them off.
Contractors who live in your property need to be close to the big centres of their work, be it hospitals, engineering facilities, construction hubs – or have good parking facilities and transport links. Work out whether the area near the property you’re looking at will thrive as a good location for these workers.
4. Check stats provided by estate agents
More often than not, the measurements provided by estate agents are bang on. But sometimes slip-ups are made and so it’s always best to do your own measurements for your records. The best tool for this is a laser measurer – they don’t cost a whole lot of money, but give peace of mind.
I’ve been to some properties where it’s clear the measurements provided are a little fluffed up for the sake of presenting a better picture of the property. Knowing the exact measurements, and how they potentially sway from what’s provided, could give you a valuable bargaining chip in offer negotiations.
With regards to room measurements, always check to see if chimney breasts and other fixtures are excluded from the floor plans.
5. Check the property’s appliances
Once you have made a note of the bigger picture, look at the details.
What state is the boiler in? It should have certification that will show when it was installed, and when it is due for a check-up. A new boiler can be a relatively big outlay, but having a healthy boiler will save headaches down the line.
Similarly, if there will be a communal area for washing and drying of clothes – say, in a student accommodation – are there machines already in place? If so, are they in good working order or will you be buying new ones?
Check the fixtures and fittings in the property. Look for wood – lintels, bannisters, door frames and the like. Is it in good condition? Or is it flaking away, or damp and swollen (big concern). At the very least, poor trim could put off potential tenants and the worst-case scenario is that it hints at bigger problems such as damp and rot.
Keeping these sorts of factors in mind will give you an idea of what sort of extra outlay a potential investment property might need. It could be a relatively small initial cost – but other times, lots could add up and start to create unwanted expenditure.
These are just some of the bigger things to think about when searching for an investment – there are of course lots of other points to consider. If you have some questions that need answering, don’t hesitate to get in touch. Email me at email@example.com, or you can always drop me a line on 07944 726676.