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Which is the best area for me to invest?

July 30, 2018

A huge consideration for any property investor is where to invest.

The obvious answer is that you should invest in an area you know well, which is usually where you live or where you have family connections. Most experienced landlords will advise you to invest locally as you have that all-important local knowledge and you can visit the property easily if necessary, not only to view it prior to putting in an offer, but also for on-going tenant and property management.

The importance of local knowledge cannot be understated. The better you know and understand an area, the more you mitigate your risk.

You should consider such issues as:

  • Transport links - road, rail, bus, airports, sea links
  • Schools - high OFSTED rated schools are one of the main reasons families choose to live in a certain area
  • Local amenities such as supermarkets, leisure facilities, retail parks, open spaces like parks etc
  • Big employers in the area
  • Crime rates
  • Social issues and how many people in the area are on benefits
  • Traffic issues and parking availability
  • Whether the area is having money spent on it for re-generation or whether there is evidence of decline

These are all things that will impact on tenant demand and desirability to live in the area. They are also important considerations for both rental yield and future capital growth.

Investing locally means that you can walk the streets getting to know the area and also visit local estate and lettings agents and start to build relationships with them.  They are a huge resource of local intel and are well worth speaking to.  Most agents will freely give advice on such issues as tenant demand, the best property type to buy, the best streets to buy in etc.

Of course, one of the main considerations for all landlords is yield. Very simply, yield is the income return on an investment of money. In areas of high prices and lower rents, yields will be significantly less than areas of lower prices with comparatively higher rents.

At the time of writing, the North West and North East of the UK are producing the highest yields, ranging from 6% to 8%. Depending on which research you choose to follow, Burnley, Manchester, Liverpool, Stoke on Trent, and Nottingham are the areas of the highest yields.

Interestingly, in the South East, Portsmouth continues to perform well with yields around 4.8%. However, what are your options if you live in the South East and want to access the higher yields in the North of the country?

Investing in an area of which you have no local knowledge significantly increases your risk. Cheap properties look enticing, but they are not always good investments.

Without undertaking extensive research in an area you are not familiar with, you could end up buying a property in a street where the police fear to tread! That might make it difficult to find tenants, or you may only be able to let to tenants in receipt of housing benefit or Universal Credit, which is potentially far more hassle!

This is where buying a tenanted property with Vesta can really come to the fore.

You can buy in confidence in an area that you are not familiar with because the property is already tenanted and you know the type of tenant (family, young professional, couple) that is living in the property. You can also check the track-record of rental payments and how the tenant is living in the property and looking after it and get a feel from the tenant about how long they might like to stay in the property.

With a property bought via the Vesta platform, tenants are included, meaning that you earn income from day one of ownership, there are no tenancy set up fees or costs getting the property ready to let, and there may well be an existing agent in place who knows the property and has an established relationship with the tenant.

Vesta CEO Russell Gould says: “With high property prices and lower rental yields in London and the South East, many landlords are tempted to go on a yield hunt up North. However, not all properties and all tenancies are equal, and buying in an area 200 miles from where you live is fraught with potential pitfalls that could contribute towards your property being loss-making or causing you stress.  Those pitfalls are amplified when things go wrong and you can’t be on hand to visit the property or deal with any issues around it. This is why a tenanted property bought through Vesta is so appealing as your risk is greatly mitigated.  You already know that your property has tenant demand, as a tenant is already in situ paying the rent and you also have the reassurance that you will be earning income from the day of completion of the sale. There may already be a managing agent in place, but if not, Vesta would strongly recommend that you employ a local reputable agent - a member of ARLA, NALS, or RICS - to manage your property locally, as being a remote landlord, you may struggle”.

Whether you decide to buy a property close to where you live, or 300 miles away, buying with a tenant in situ is probably the most low-risk way you can invest. That is why we created Vesta as a new trading platform for landlords to find properties that already have confirmed tenant demand, because a tenant is already in situ.  This gives the added benefit of knowing the exact rent you will be receiving, which enables you to calculate the precise yield that will be achieved.

In property investment, the numbers never lie, so Vesta creates transparency and certainty with actual figures, not theoretical ones.

All our property listings on Vesta have a snapshot of the investment metrics, including yield, making it easy for you to identify prospective properties that suit your investment criteria, whether that be local or far from where you live.

Vesta is already catching on with landlords who are starting to recommend it on landlord forums and groups, so, if you are thinking of investing for the first time, or expanding your portfolio, then make Vesta the first portal of call.

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