With over 16 years of experience as a property investor and landlord, I am often asked about the best places to invest in property. The answer is not as straight forward as people may think, but that is a good thing.
So where is the best place to invest in property? People typically ask this question because they want to know which areas are producing the best yields and capital growth. That’s fine, BUT the answers or locations they receive may not suit them for a number of reasons. The world is a big place and there isn’t any one particular place that is good for everyone.
There are two factors that you should consider:
1. Location relative to your approach as an investor,
2. and time.
It’s also important to realise that a good investment property for me, may not be a good one for you and vice versa. Return on investment is based on how much capital you have tied up in the property, and the yields are based on the rental income and the purchase price. I have written an article which will teach you how to calculate the Net Yield and Return On Investment.
Let’s say we both view the same two properties at separate times. Property one may be a better investment for you, because you’re a better negotiator than me. I might be looking to pay 100,000 for it, and you might get the price down to 85,000, which would affect the yield in your favour dramatically. That makes it a good investment for you, but not necessarily for me.
Now, I might see an opportunity with property number two that you don’t see. I go and buy it and add value, whether that’s an extension, a change in the layout, or even a change of use through planning permission. I end up receiving a bigger return on investment and a higher yield despite your bargain on the purchase of property number one. You see where I’m going with this?
There are good investments everywhere, but they will take time to find, and there’ll be some legwork required. In order to find the best area for yourself, there are just two things that you need to consider.
Location For An Investment Property
The first thing you should do is think of location in terms of comfort. If you’re looking to buy your first investment, you might want to buy near your home so you’ve got the comfort in knowing that you can get there quickly and easily if there’s a problem, while you find your feet and learn the ropes as a property investor and landlord.
Because I used to move around with my work a lot in the Armed Forces, I bought my first investment property near family who had settled in the area. Having the peace of mind and knowing that it would be fairly easy for them to visit the property and help out if there was ever a problem, was a huge comfort.
Once I had decided on the city, the estate agents then told me which areas I should look at. If I knew then what I know now, I’d have obviously taken the time to have contacted some letting agents to get their opinion as well. But thankfully, it all worked out fine.
Location can also be determined by how hands off you want to be as a property investor. If you’re happy to take an armchair investment approach, then the location won’t be so much of a concern for you. But you will still need to consider the next thing, which is how much time you have in order to visit the area and confirm your research and carry out property viewings.
How Much Time Do You have?
It’s important that you have knowledge of the area that you’re considering investing in, and you’re going to need time to do this. You can start your research online and make a few phone calls, but I’d recommend visiting the area a number of times before you consider making a purchase there.
If you don’t have a lot of time to travel long distances, then I would recommend investing near home or a territory near your home, say within a 30 to 60 minute drive. That’s because it will be easier and quicker for you to do your viewings and confirm your research.
You can also consider the town or city where you grew up or place where you’ve lived in the past. You will already have some knowledge of the area, and you may have family or friends there that can help out, similar to the position that I was in. And hey, when you start shopping for a property, you may also be introduced to opportunities in the area through people you know.
As I’ve said before, don’t spend too much time chasing the best deal, because there’ll always be better deals out there and people that have more success than you. But that will likely be because they have more experience of being a landlord and a property investor. It won’t just be down to the location.
Property Investing Hotspots
If you are experienced or confident or you simply don’t have the time and you want to invest with a ‘hands off’ approach, then you may want to focus your research on areas that have performed well in recent times. BUT the property market is full of cycles and there is no guarantee that a specific area that has performed well in the recent past, will perform well in the future.
It’s likely that the areas that have become recent hotspots are not going to be near you either, so you will need to work with a reputable letting agent that can manage the property and respond quickly to any questions that the tenants may have.
Location and time are the two factors that will determine which areas are going to be best for you to invest in property. Don’t get hung up on the best location in your country, especially when you’re starting out. Look for a good location that’ll work and fit with you and then look for a good property. It’s like anything, you’ve got to be good at something before you can be great or the best at it.
I have also written an article to help you with your research for a good location once you have decided on a specific area. And please make use of my property viewing checklist to reduce the risk of missing any crucial details on your property viewings.