The market is changing; the act of investing is based on risk versus reward. No investment is guaranteed, but how can you minimize that risk and increase the reward?
We are in an age where you have to be willing to adapt to changing environments. Using the tools available to you could be crucial in ensuring you are not left behind and property is still a viable place for your money.
Many smart investors are starting to realise the best place for their money might not be local, and is there really any difference?
If you invest in the stock market you don’t pick companies based on them being headquartered in your town, you invest based on your level of risk and what you feel is best placed to make you money.
So here are a few tools you can use to minimise your risk, help you with your research and make more informed decisions...
Lend Invest is a bridging finance company with a buy to let index on its website. It’s not accurate to the pound but if you want to start exploring some different areas this is a good place to start.
The index has some easy to use heat maps where you can explore capital growth, average yield and Return on Investment (ROI).
Mouseprice is copyright of Landmark Analytics Limited and is a useful free website anyone can use. Under the area guide section, you can enter the out code of any area and read a brief history log of the town, village or city you are researching. You can even look at the demographic of people living in the area, average age, social housing etc.
There is also plenty of raw data and statistics that allow you to drill down into price growth over certain time periods along with current price trends.
After teaming this up with a few other websites, you are almost ready to make a clear decision on where you want to start your search.
Home works well alongside Mouseprice, there are a few useful sections that can help you with your research on a buy-to-let purchase.
You can research the average rent in areas and for the types of property within these postcodes, you can even see the number of rental properties in the area, available and already rented.
The websites above are great at the primary stage but they are no substitute for hard, feet on the ground research, they give you some good guidance and it’s a lot easier to do this from the comfort of your home or office.
Google Alerts is a really useful way of getting all your market news in one place on a daily basis without shifting through every half decent website and newspaper to see what is happening in the property world.
Don’t get me wrong, there are some articles of waffle and over exaggerations but as long as you can suck out some of the facts to help form your own opinion it still saves a lot of time.
I have 7 different alerts set up. On average they include 3-5 articles per alert, some will overlap, and they get sent out 2-3 times a day. The first one comes in around 7.30-8am – which makes it easy to read over breakfast, on the train or once you get to your desk in the morning.
I have simple terms set up like 'UK Buy to Let', 'UK property investment', 'UK Government Housing Policy', 'UK Regeneration Projects', 'UK Mortgages' and 'Buy to Let mortgages'.
Rightmove, Rightmove Plus and the Land Registry
We all know about Rightmove and Zoopla. I actually prefer Zoopla but use Rightmove as it has the largest user base and the most property. It is user preference but for research you want access to as much data as possible.
So, you've outlined your areas, researched the type of property and the people you are going to be renting to, and the strategy is starting to come together.
An important point; I like to work backward to work forward. Start with the reason you are investing and what the end goal is, then work back hence the order of the above list.
Now it is time to starting finding the property...
Rightmove is a minefield. Remember the property you are looking at “for sale” are marketing prices decided by agents and sellers, but they can give you a good indication of what is happening in the local area and if you look at the sold/under offer properties it will give you a better idea.
You really want to be trying to find the units ahead of them hitting agents or auction houses, but speaking with some good agents they will have the odd off market gem you could get your teeth into.
I use this just to confirm my thoughts on pricing along with looking at the rented/available to let property to understand what particular properties in this area are going to yield.
If you are lucky enough to have access to Rightmove Plus then you can run full reports and get a much more conclusive view on pricing.
Remember - there are no scientific or mathematical ways of valuing properties, that is why it is an open market, and just because you find a good deal that is on the market and the figures stack up because you are investor, does not mean you need to low ball every offer.
You will only push away the people that offer you the good deals and they are very important to keep onside if you intend to use a good agent to manage your property after.
I have built a very simple yet effective ROI spreadsheet that helps me assess cost and return on cash invested.
I can clearly forecast everything from net rent received after mortgage and management fees down to the final cost of acquisition.
The figures are obviously subject to some fluctuations but I do this for every property I am looking at and keep them all on file.
This is a really useful tool when working out if a property fits into your investment plan. Drop me an email to firstname.lastname@example.org if you want me to send you mine.
I know investing out of your local area can be a daunting prospect but with the right research and access to the right information you are just as likely to bump into issues locally as you are further out.
The market is changing. No investment is guaranteed and capital growth and prices continuing to rise at the same rate is most certainly not. It is about making investments more predictable.
*This article was written by Joe Farrington, an Investment Advisor at Choices Acquisitions & Investments