Whenever you’re making any kind of business decision or new venture, it’s always a good idea to create a plan or strategy. This is especially important in property investment, as without the right planning and prior knowledge, you can end up limiting the overall success of your venture.
Before realising the importance of a property investment strategy, you need to fully understand what this involves. A property investment strategy is basically a detailed plan outlining certain steps you’ll take to meet your financial goals through investing. Your specific financial goals will be key to the type of property investment strategy you set out to follow. For instance, if you want to eventually be able to quit your job and start investing on a full-time basis, you’ll need to create a strategy that focuses on building a larger portfolio of properties over a long term basis.
Alternatively, if your goal is to simply boost your monthly income through a consistent stream of rental returns, and then hopefully gain a large return on investment in the future when you decide to sell the property, focus on finding a property with good capital appreciation potential. This type of goal ties into the importance of researching locations as part of your investment strategy.
There are certain UK cities and regions that have better prospects for property investment than others, which is why it’s so vital to be selective on the area you choose to invest in. The north-west region, for instance, has become synonymous with property investment, offering attractive rental yields, affordable property prices, growing demand for rental properties and excellent capital growth potential. Liverpool, boasts an average rental yield of 5.05 per cent, while Manchester has an average rental yield of 5.55 per cent. Those looking to invest in these key cities should look for opportunities with companies like RW Invest, who offer north-west properties with yields as high as 7 or 8 per cent.
Not only is location key when it comes to rental returns but the area you make your property investment in can dictate how much the property grows in value. The north-west has the highest predicted house price growth in the UK. By 2022, the region’s property market is expected to increase by 18.1 per cent, compared to just 7.1 per cent growth predictions in London. Those who are looking at long-term financial growth in their investment strategy should keep figures like this in mind when trying to find the most worthwhile opportunities.
Another key element of a property investment strategy is working out which type of property you’d like to invest in. This can largely depend on the type of tenant you hope to rent your property out to. For instance, if you want to rent to a family, consider buying a house with a garden space that’s located in an area close to local schools, transport links and attractions like a park. On the other hand, if you want to rent to a student or young professional, you should plan to invest in a city centre apartment with features like high-speed internet access and a modern, stylish design. Often, these type of younger tenants are the most desirable among buy to let investors, especially in cities with high student populations or good business prospects. In such cities, there’s usually a steady stream of demand, meaning that you’ll benefit from a consistent stream of rental income.
Amongst all of these things, you need to make sure you have a good understanding of the financial aspects of the investment. As part of your strategy, think about any taxes you’ll need to pay, whether you’ll need a buy to let mortgage to get you started, and any other finance-related elements. This way, you’ll be more prepared to take on your investment and have a better chance of success.