Property Investment - Researching The Location

 It’s always wise to have an idea of what type of property you’re looking for when considering an investment and this article outlines 8 of the different factors to consider when researching specific locations.

1. Infrastructure

It’s important to consider a town’s infrastructure when looking for an investment property, especially in terms of what future investment is to be made in that area.

Local Authorities and Councils will have an annual budget for both the maintenance of current infrastructure and also for the construction of new infrastructure projects. Finding out how much the annual budget is and future investment will give you an idea of how proactive the authority is in attracting new residents, extra funding and business opportunities.

Most councils will be happy to provide most of the information and a lot of it will appear on their websites. Also look at the websites of local big businesses to get information on their future plans which will attract investment and create new jobs in the area.

2. Proximity to Amenities

In most cases, the main purpose in buying an investment property is to attract tenants who will pay a weekly or monthly rent.

It’s important to know what type of tenants you are looking to attract and so any potential investment property will need to be close to the amenities required by the tenants. A city worker will want to rent a property close to shops and transport whereas a farmer will have different requirements.

Most properties in close proximity to the town will rent fairly easily compared to those which are a 15 minute drive outside of the town. Properties close to the town will also attract tenants who don’t have their own transport.

So it’s best to know what your tenants requirements will be before you purchase.

3. Local Employers

It will always be easier to find tenants in towns where there are large employers in the vicinity. These include factories, large shopping malls, hospitals and universities.

With hospitals, many of the employees may be employed on a temporary basis and so owning or buying their own property in the area may not be a choice for them and renting is the easier option. Also, in the case of universities, a lot of the students will come from out of town and so renting is again the best option. This offers them more flexibility however it also means that your investment property could be vacant during certain months of the year and may switch tenants on a regular basis.

Again, be sure to research the future plans of these employers. If a major employer is due to shutdown or relocate in the near future then there will be a glut of empty properties with landlords doing whatever they can to fill them including drastically reducing the rent.

4. Geographic Location

This will determine both the type of tenant you get and also how easy your investment property will be to rent out.

Holiday properties near the ski fields will command a higher rent than a property in the city however it may only rent out for a few weeks per year. A beach house will also be in the same position. Again, it’s important to understand the type of tenants in the area, what they are looking for, how much they are willing to spend, etc.

A beach house may command a high rent but may only attract retirees who are willing to pay top dollar and so this narrows the number of potential tenants. Properties closer to cities and amenities will likely attract a higher number of tenants willing to pay a lower weekly rent.

5. Demographics

Spend time understanding the demographics of the areas population and you will have a better idea of the type of tenant you can expect.

Find out the populations’ average salary, the different age brackets, percentage of those married and single and the percentage of the population that rent.

The demographic information will show if the town’s population has been growing or declining over the past number of years and therefore if an investment is a safe bet. It will give you an idea of the earning capacity of tenants and how much rent you can expect.

It may also show movements of parts of the population to new parts of the same area due to factory closures, increase in crime etc.

6. Property Median Prices

Historical property prices will be a good indicator to the fluctuations in property values in the area over time.

A property may look like a bargain at first glance but with a little research you may discover that the same or similar properties changed hands previously for a lot more money. There may be a simple explanation for this such as a vendor wanting a quick sale but it may also reflect a dive in the local property market for various reasons.

Median prices will give an indication of what you can expect to pay for the different types of properties (no. of beds, land size, etc) in the area and the figures may also show the number of recent sales. The historical figures will also give a pattern of historical growth or decline in the area over time and this could be used to indicate a property’s future value.

7. Occupancy/Vacancy Rates

Each area will have a certain percentage of rental properties tenanted (occupied) and the remainder without tenants (vacant). Towns with a high vacancy rate (normally deemed to be more than 4%) will make it possibly harder to find tenants to fill your rental property as it shows a lot of competition for too few renters.

Too few renters will also mean that landlords will have to be more creative in attracting tenants and may need to reduce the rent and offer other incentives to entice renters.

Areas with high employment and a strong outlook for the future are likely to have a higher occupancy rate and this may even cause competition amongst renters, allowing landlords to set higher rents.

8. Property Managers

Finding a trustworthy property manager is important if you will not be looking after the property yourself in terms of finding tenants and collecting the weekly or monthly rent.

Good property managers will communicate regularly, carry out periodic property inspections, arrange repairs and, most importantly, regularly deposit the rent (minus expenses) to your bank account.

There are also many other duties a property manager can carry out and it’s important to question those managers in the potential area to find one or more likely candidates that are going to take care of your investment.

Find out how many rental properties they manage, how long they’ve been in business and ay other questions you deem necessary until you find one you are happy with.

In closing, the above points are only guides for you to learn more about an area before you make an investment. There may be more factors you’ll need to consider depending on your situation but if you research the above you naturally increase the amount of knowledge you have about the area. And the more knowledge you have will reduce the risk of a potentially poor investment.

About the Author: Tim Wright is an international property investor and regular article contributor. He is the author of "Bulgarian Property - The Overseas Buyers' Kit available at http://www.bulgarianpropertybuyer.co.uk

Source: www.isnare.com

 Tim Wright

More Articles 

Tips for Inground Swimming Pool Liner Preparation and Installation! - Daniel G Osko
Do you think that only the pro's can do it? Think again. Although we recommend a professional installer, with the correct tools and care most anyone can install their liner. Just follow the guide below, and you decide. A little work can save...

The Right Time To Buy Your First Home - Cecelia Taylor
There are many real estate market forecasts and predictions available - however the bottom line is that if you want to buy your first home—there is no wrong time. This is because the motivation to buy is not determined by regional market conditions...

Seven Steps To Make Buying A New Home An Enjoyable And Intelligent Move - John Davin
Buying a new home is one of the most exciting and most important decisions you will make in your lifetime. For both financial and lifestyle reasons. However, it may not be apparent if you have made a good move until months or years down the road, so...

What Are The Different Types And Qualities Of Stained Glass? - David Gomm
Many times we meet people who are interested in stained glass, but they haven't learned enough about it to really be able to tell whether a piece of glass is a true work of art or just a good piece. I once overheard a woman gushing over a piece...

High-End Manhattan Renovation Guide - Colleen Barry Sleicher
www.savetimeny.com/Guide.HTML Manhattan High End Residential Construction by Colleen Barry-Sleicher Manhattan High End Residential Construction Information for brownstone, apartment, condominium and coop owners and...

How To Fix Or Repair A Wobbly Chair With A Few Drops Of Glue - Martin Jones
So, you have that wooden chair with one or two loose legs or rungs. The chair is too nice to throw away and you don't want to take the whole thing apart to fix one or two loose dowels or legs. And at the same time, although you leave...

Notions of Home Improvement - Tony Robinson
Home improvement is affordable at times, yet at other times, it could cost you a fortune. Home improvement plans do not have to be expensive, yet when homeowners let go of repairs it can lead to outrageous results. If you are considering...

Warmth for Your Pet - Faith Williams
Do you want to keep your pet at a maximum comfort level? Feel bad because your dog lies on the cold tile floor in the kitchen while you make his dinner? Then you should consider radiant floor warming, for both you and your pet. Electric radiant...

Bathroom Faucets: Beauty, Functionality, and Versatility - Phil Hambly
The bathroom is often one of the smallest room in the house, but it ranks second behind kitchen for the number of design and architectural decisions that must be made. From a design standpoint, the bathroom has some of the...

REPAIRING PUTTY WINDOW GLASS - John Rocco
REPAIRING PUTTY WINDOW GLASSHave you ever thought about fixing a broken window in your house, but didn't think you could do it because nobody ever taught you how to cut glass? Well, you really don't have to know how to cut glass in order to repair...