While there are many property markets around the world which are still struggling to come to terms with the aftermath of 2008/9 worldwide economic collapse, others appear to be going from strength to strength. The UK property market, taking a slight breather head of the EU referendum, has been an impressive performer over the last few years leaving many competitors in its wake. However, not all property that glitters is gold!
Be selective
Sometimes it is very easy to get caught up in the momentum of the UK property market, with London still particularly popular, and assume that all property prices will be dragged higher. True, there are many areas of the UK which have continued to perform even in these troubled times but you need to do your homework. Experienced investors will tell you that it is easy to make money in buoyant markets but the cream really does rise to the surface when markets become more difficult.
Location, location, location
Time and time again we have seen examples where investors, sometimes with relatively little experience of the market, have been attracted to quality properties which certainly look the part. Unfortunately, location is vital when looking at any property investment because sometimes a property can look high-end but if you are looking at the rental market you may find there is a ceiling on what people are willing to pay in the area. This can significantly reduce the rental yield on your property which will reduce your long-term return on investment.
Know your customers
It may seem a little strange to suggest that those looking to buy property to rent need to know their customers as for example an investment adviser would need them to know about their customer’s requirements, situation, finances, etc. If you go into the buy to let market with a mindset that you are offering a service, you need to offer a service which is in demand. While demand for private rental property in the UK has increased dramatically over the years there are still certain criteria for different areas.
The key to maximising any investment return is to either sell as quickly as possible or ensure that your property is rented out as quickly as possible. Any delays in developing the property or renting out to third parties will hit you in the pocket and extend the term required to repay your investment. If you expect customers to come to you who may originally have been looking for a different type of property to rent then you might be waiting a long time!
Conclusion
When property markets, indeed investment market in general, are riding high it is very easy to get dragged along by the momentum. This is where we see overbought positions with prices pushed to levels which are unsustainable in the longer term. Some areas of the UK have been experiencing a shortage of “suitable property” but this is not an excuse to move into different types of property which may not be as popular. Remember, all that glitters is not gold…..