The importance of location when choosing a property for investment
Finding a property to invest in takes time, and there are many different factors to consider before you make your choice. Location is one of the key elements that you need to get right to keep your investment safe…
When it comes to investing in property, choosing the right location is crucial. In fact, it may be the most important factor to consider. The location of a property can greatly affect its value, potential for appreciation, and overall return on investment. But this is the case for all property purchasers, so how is it different for investors?
Fundamentally, the location of a property is a critical factor when investing in property because it is one of the only things you can't change or impact yourself. If you have a property in a highly desirable area, it will be worth more than a less favourable one. Buyers and tenants alike will want to live in a nice place, so the demand for a property in a good location will be higher.
But buying properties in the very best areas might not be the best investment. As an investor, you are looking for a return on your investment, which will be impacted if your initial purchase price is very high.
Instead, landlord investors look for the best location that is popular with tenants. If there is a high population of tenants who want to rent a property, the demand for renting increases.
Here are some key reasons why location matters when it comes to property investment:
1. Access to amenities and services
A property located near desirable amenities and services, such as schools, hospitals, shopping centres, and public transportation, is more likely to attract tenants. This can lead to higher rental income and potentially a faster increase in the property's value.
2. Neighbourhood safety
The safety of an area is a significant consideration for tenants, particularly if children are living in the property. A property in a safe and secure neighbourhood can command higher rents and will likely rent out faster, resulting in less void times for your property.
3. Employment and Infrastructure
When looking for a property to rent out, it makes sense to consider who will live there. Many landlords opt for properties close to industry, businesses, factories and hospitals. This way, there will be a constant stream of potential tenants who might want to live in that location because it is close to their workplace. This also means that these tenants are looking for your property for their convenience, not necessarily because it is the 'best' area. Minimise the commute and stress of getting to work. They may be able to walk, which would reduce transport costs. This can be particularly important if the workplace has shift working patterns so tenants can get home easily at all hours of the day and night.
So, before you go buying up every terraced house near a hospital, consider these key things:
What are you looking for in a tenant? Not all tenants are created equal, and not all properties are suitable.
By the property that will fit your ideal tenant - If you want to offer a lovely home to a young family, then that swanky flat you've been eyeing might not be the best option.
Consider what that ideal tenant will need—a professional tenant is probably not going to care about whether there is a school nearby or the garden is large enough for a trampoline, but they will want to be able to commute to work easily without any unnecessary hassles. Likewise, if you decide to invest a larger sum in a family home, consider the proximity to schools and local shops, as well as safe outside space for children to play.
If you were to open a coffee shop, you would want to make sure there was a footfall of passing traffic and customers to whom you could sell your coffee. The same goes for a property rental. Is there a constant stream of tenants wanting to live in properties in this area? Whether because it is conveniently located or because transport and employment connections are good. It doesn't matter how nice you make the inside of the home; if it adds 20 minutes onto a commute or there is no bus service to the property, a tenant will likely discount it and opt for something else.
Overall, location is a critical factor to consider when investing in property. There is no point investing your hard-earned cash into a property and making it lovely if no tenants want to rent it from you. By choosing a property located in a safe, desirable area with access to transport links, amenities, and employment opportunities, investors can rely on a steady stream of tenants, thus increasing their chances of investment success.
If you are thinking about investing in property in the next year, get in touch with our team to be kept informed of new properties as they come onto the market.
Call 01843 222700 or email lettings@oakwoodhomes.biz