Over the long term, property has proven itself to be a solid asset class in which to invest. However, there are aspects that property investors need to consider before they make a final decision and sign on the dotted line.“Much of property investment success is based on the decisions made at the start of the investment. If possible, it is best to try and make your money right from the start of the deal. How is this possible? By finding properties that are listed at values below market value,” says Peggy Su, Regional Director of RE/MAX London. “To know whether a property is below market value requires investors to do their due diligence and research.”
Where do you start? Before going to see a property look it up online and read the agents or seller’s comments regarding the property’s condition and its construction. Also, see how long the home has been on the market and whether there have been any other interested parties who have possibly made an offer. Knowing the seller’s position is also an advantage, as it provides insight into how open they are to negotiation.
Compare apples with apples
Peggy Su says that once you have this information, look for other homes within proximity that have recently sold and for how much. “Find similar homes that have sold within the past year, ideally no further than a mile away from the home you are looking at,” she says. “Start with properties on the same road and work out from there. Having an idea of the pricing in the area will provide perspective as to what would be considered a fair market value of homes in the vicinity. Also, look at the current rentals in the area, particularly if the home is being purchased as part of a buy-to-let portfolio – this will provide insight into the possible expected rental income.”
Google Street View
A great tool to view the surrounding properties and neighbourhood is Google Streetview. From the comfort of your home, you will be able to get an idea of the amenities in the nearby area, as well as the overall look and feel of the neighbourhood. While they may not be completely up to date, the online images will provide you with a picture of where the property is situated in relation to the town centre, main roads and public transport.
Another excellent resource is the area’s council planning portal, as this will provide a planning history on the property. Knowledge of any failed plans will give you valuable insight into what may or may not be done to the property to add value.
In closing, Peggy Su says that purchasing investment property can be a highly lucrative endeavour provided the research is done, and the investor goes into it with their eyes open.