Investment properties: Where and what should you be looking at?
We are often asked, ‘is now a good time to invest?’. The truth is that we don’t have a crystal ball, but if you can find good deals on investment properties and are confident in the demand for rental properties, then it can be a good time to buy.
For example, at the moment, many long-term landlords are considering leaving the rental sector for a variety of reasons, and this could offer the option for new entrants or those expanding their rental portfolio to pick up some good deals on investment properties.
Let’s take a look at some of the current trends in the property market. In this blog, we will talk about what types of deals may be available and what you need to consider before making that property investment.
Probate properties as investment opportunities
Probate properties will always be a good option for investment properties, both in the sale and rental markets. Firstly, they are often for sale through auction or in need or a quick sale, which can provide an opportunity for a buyers’ market.
Secondly, they are often bungalows. Bungalows are a fantastic investment property option, and we will talk about how to get the best out of them in the next section. But this fact alone makes probate properties particularly sort after as rental investment properties. It is not uncommon for probate properties to be of the ideal rental property size – 2-3 bedrooms – and they frequently have parking and some outdoor space which are all huge selling points.
One downside of probate properties is that they often require work. They will frequently have dated interiors and require redecorating or even minor works. However, this is often reflected in the price and with many of these properties, the work required is predominantly superficial such as repainting and new carpets.
If you are looking at a probate property and trying to consider where to spend the money on redecorating, think first about what you can save. If there is an older kitchen that is still very solid, you may be able to retain the carcass. Simply replace the cupboard fronts/doors or even repaint them to give the whole space a face lift for a fraction of the cost of a new kitchen.
Our top tip is to always ensure you have all the systems in the property checked by a professional before deciding on where to spend the money. Make sure the electrics and plumbing are up to scratch before you go choosing colour charts.
What not to do to a bungalow as an investment property
Bungalows are ideal investment properties for various reasons. They have great accessibility, allowing you to access a full range of potential tenants. They often have outdoor space or a garden and
parking, both of which are significant selling points, especially for rental properties. But if you have got your bungalow as a probate property or if it is in need of modernisation, you might be tempted to make some changes. Here are some of the best and worst things to do with your rental bungalow.
Don’t put a dormer on. Some bungalows do benefit from adding a dormer to create an extra bedroom but in many cases, and especially in the case of rental properties, the added value of the extra bedroom never covers the cost of adding the dormer. Now if you are adding a dormer for a property you are living in, or you want to sell it, then it may be viable. But in the case of rental properties, it is almost never worth it.
Please keep the garden. It can be very tempting to cover the garden over with concrete, particularly if it is a front garden, in the hope of more parking or similar. But gardens are in high demand throughout the rental sector, and it will cost you far less to maintain the garden than to rip it up and cover it with concrete.
That said, if your property doesn’t have any off-street parking and parking is a problem, you may wish to create one parking space while maintaining some outside garden space.
When deciding what you do with your rental property, consider smart spending that adds value and saves money. Bathrooms can easily be revamped with a good clean, some new flooring, and fresh sealant around the sink and bath, etc. Kitchens often don’t require a full replacement either as mentioned; swapping cupboard fronts is a good start, or consider if any built-in appliances need updating, like ovens.
Choosing a neutral colour like white – please, no magnolia – for the majority of the property saves on paint costs and adding some colour with one feature wall in a nicer paint colour can really make a room pop for a very low investment.
The holy grail – 3-bed rental properties
The holy grail of rental properties is a 2–3 bed home with a garden and parking. These don’t come up often and there is always huge interest. If you find a property like this for sale at a good price, then it is worth investigating at least.
Since the pandemic, demand for garden space as increased significantly, and many tenants now see it as a deal-breaker attribute when comparing properties. This is especially true for tenants with young families or similar.
Somewhat hand-in-hand with this increase in demand for outdoor space is the increased demand for properties that take pets. We are fully aware that not all landlords want to take pets and that landlords may have differing views on what type of pets they will and won’t accept. But if you have a rental property that could be suitable for pets, for example, it has outdoor space, please do consider if you would accept any type of pet and in what context as knowing this early on can make a huge difference to the response for a property.
We are always happy to advise on how to manage pets in a property, and you can check a blog on some of the recent updates here.
Location, location, location
When considering an investment property, you need to know your numbers. We always recommend speaking to letting agents who are experienced in the area you are buying in as they can offer huge insight into the expectations of local tenants, the current market trends and the rental values for the area.
Many areas will have a natural rental value ceiling that will be specific to that area and may have a bearing on what investment you choose to make in your property, whether that is the purchase price or any remodelling that is required.
There is high demand for rental properties in all areas across South Devon, but the demand for different types of rental properties varies depending on the location.
So, if you are looking to take on investment properties to expand your rental portfolio get in touch today for a chat about how we can help.