This is the first part of a 2-blog series looking at all the things you need to consider when choosing an investment property. Here we will look at it from a tenant’s perspective and then in our next blog we will look at it from the business side of things. Come back soon so you don’t miss that.
Now, on we go with looking at the considerations you need to make when choosing an investment property with the eventual tenant in mind.
Choosing an investment property: target tenants
Property investment is a business. And like any business venture, you need to consider your target audience before you select your ‘product.’ You need to consider who your target tenant will be before you buy.
Will your shortlisted properties attract single professionals or growing families? What do they want from the property and the area?
Each type of buyer expects and needs different things so make sure you’re buying an investment property that will attract your preferred type of tenant.
Look at every other aspect we discuss here through your target tenant’s eyes. If you were in their position how would your proposed property measure up?
In terms of security, it’s not just the property itself to consider. Check the safety of the local area, what’s the crime rate like? If it’s an apartment, is it a gated complex? How safe are any communal entrances? If it’s a terraced house with a rear yard and an alley at the back, is the alley gated at both ends?
This isn’t to say that you should avoid less desirable areas. Sometimes they are the best areas to invest in with the highest returns, but you do need to consider security a bit more, especially if the property is going to be empty while you carry out any improvement works.
You can’t control the occupants of neighbouring properties but some due diligence is highly recommended. Speak to the neighbours before you buy, ask them about the area and the history of the property you’re considering. This will also give you a strong first impression of the neighbours themselves.
Problematic or anti-social people living in the area can really impact the demand for your property and how long any new tenant would stay.
Whilst families may want a large garden, young professionals probably won’t. They will want a low maintenance property. This is another important factor to consider when thinking about your target tenants.
If you’re targeting the retired community, they’re not going to want to climb stairs.
What’s the access like for vehicles considering most tenants will have at least one car or van? Does the property come with allocated parking or is on-street parking going to be easy to come by?
If the property needs work is it easy for builders and their materials to get to site?
Changing the access to the property can be expensive so consider any negative impact from the current access situation from the outset.
Are the fixed living costs such as council tax affordable for your target tenants?
Is the property well insulated and energy efficient or will you have to pay for improvements?
If it’s an apartment have you factored in any service charges, maintenance charges, or ground rents?
In the modern digital world most tenants won’t take kindly to poor broadband speed or bad phone signal. Whilst this may not be top of your list as an investor, it will matter to your tenants – particularly if you’re targeting professionals who may be working from home or families with kids who spend all day gaming!
Are there any terms tied to the property that will negatively impact your tenants? It may prove difficult to find out if this will be the case at first but your conveyancer should point out anything that could be of concern.
On the finance side (if you’re getting finance), does your lender prevent you from doing anything that would be important to your target tenant?
Consider all legal implications with your target tenant in mind.
So, that’s it, our 8 most important considerations when choosing an investment property from a tenant’s perspective. Remember, in our next blog we will look at the vital business side of things, including the current property market, making the numbers work, and sourcing a location that will give you a strong yield. Don’t miss that one.
Are you looking for your next investment property?
At E&M Property Solutions we’re experts in traditional single lets and specialists in HMO’s, so we can help you source the perfect property. Then, if you want us to, we can take care of any refurbishment works and the management of your rental property. We offer a complete beginning-to-end service for investors. To find out more contact the team on 01282 711560 or email firstname.lastname@example.org.