Covid-19 hasn’t changed the fundamentals of property investment (or any other form of investment). It has, however, changed some of the details. With that in mind, here’s a quick guide to what property investors should be checking in 2021 (and beyond)?
Can a property be sold to residential buyers?
Whenever you buy an investment, you need to formulate an exit strategy. This is particularly important for property, due to the lengthy, complex and expensive selling process. Post-Covid-19, it’s probably safest to look for property which could feasibly be sold on to either residential buyers or investors.
In simple terms, this means that you need to look for properties which would be acceptable to mortgage lenders. For example, you’d want them to have a decent length of time on their lease. If you’re looking for bargains in the 'cash-only' market, then make sure that you can address the issue which made the property 'cash-only'.
Is the property in a good area?
Post-Covid-19, the idea of “a good area” has changed somewhat. From an investor’s perspective, you’re still looking for areas which can deliver good yields. You may also be particularly interested in areas which offer the potential of capital appreciation.
You still need to look at general renter-friendly (and residential-buyer-friendly) features such as local facilities and amenities. Properties with access to green spaces have long been appreciated and are currently in especially high demand.
Access to transport links may, however, be more of a negotiable point than it used to be. If people are either working from home or “hybrid working”, they can be more relaxed about veering out of the main commuter belt areas. You might not want to go too far off the beaten track but you can certainly explore its outer limits.
Is the property suitable for home working?
You don’t need to rule out studios and one-beds, but you do need to keep in mind that renters (and residential buyers) are increasingly likely to want home-working space. In simple terms, if a property is big enough to have a dining area, even a pop-up one (like a folding table), then it can be used for home working.
Ideally, you want properties in areas with robust internet infrastructure. You might also want to consider putting in ethernet cabling as some work-from-home jobs insist that staff use wired connections.
Is the property energy efficient?
Energy efficiency has been a growing issue for some time now and minimum standards have been enshrined in law. The issue has, however, been given a push forward by Covid-19. In simple terms, if you’re working from home, you’re using your own heating and lighting. This means that energy-efficiency takes on a whole new level of importance.
Modern buyers are also likely to appreciate good sound insulation. This is often linked to energy efficiency. Basically, anything which adds insulation will generally help to block sound. This includes carpeting, so you might want to consider replacing hardwood floors with carpeted ones. If so, you’ll need to factor in the cost of this.
*Mark Burns is the managing director of property investment firm Pure Investor