Buying an investment property outside of your local area

August 14, 2017

With higher prices and lower yields, it stands to reason that many seasoned landlords and new landlords are looking beyond London and the south east to buy investment property.

Prices are generally lower, yields tend to be higher, and, with lower prices, the 3% stamp duty surcharge has far less impact.

Buying a less expensive property also means that landlords can achieve a lower loan to value (LTV) with their funds, which in turn when buying in their own name, means less impact on them of Section 24.

However, buying in an area that you do not know is fraught with dangers and pitfalls.

Towns can vary on a macro level – from street to street – and, if you do not understand the area fully, you can make some poor investment choices, such as buying in an area that only appeals to tenants in receipt of housing benefit or buying in an area where there is very poor tenant demand.

Just as in any other area of purchasing, things are often cheap for a reason.  You as a landlord have to be able to sort the legitimate reasons from the reasons that might trip you up later down the line, and understand your investment from every angle.

There are a few things landlords can do to mitigate such risks.

The first thing is to speak to reputable local lettings agents, such as Northwood, and ask their advice on tenant demand, area, yields, potential for capital growth etc.  All our 80 plus offices around the U.K. are happy to chat informally to prospective landlords to guide them on what to buy in the local area.

The second thing all landlords must do is visit the area and walk the streets at different times of the day.

Are there traffic congestion issues, parking issues, social issues in evidence?  Are local shopkeepers doing well, is there evidence of community, is there evidence of crime such as graffiti, boarded-up shops and houses etc?  Is there much police presence in the area?  Are the properties in the local area well-maintained or are there shopping trollies and mattresses abandoned in the front gardens?  What is the proportion of social and affordable housing in the area?  Are there a lot of properties divided up into flats or houses of multiple occupation?

It’s also important to understand what is driving tenant demand, such as major employers in the area, new transport links, leisure amenities etc.

Again, your local Northwood office will have insights into all of these factors that can impact on a potential investment.

Our offices may even know of a landlord who is selling up who may wish to sell a property that is already tenanted.  This can be a very low-risk way of starting out in an area you do not know.

Find out more about our Investor List of properties for sale, suited to investment

Once you have acquired your long distance investment, you then need to consider the management of the property.

How are you going to deal with maintenance and repair issues if you live 200 miles away?  How are you going to undertake regular mid-term property inspections to ensure the tenancy is running smoothly and the property is being looked after?  How are you going to arrange viewings if the current tenant moves out? How are you going to chase rent arrears or keep an eye on your property?

This is where Northwood’s fully managed option or Guaranteed Rent service come into their own.

We can fully manage your property and be your eyes and ears on the ground. Or, if you simply wish to “let and forget”, our Guaranteed Rent service is the perfect solution.

Find out more about our range of management options

We have many testimonials for happy landlords who rely on our fully managed service to manage their long distance properties, such as these:

View original testimonial

View original testimonial

View original testimonial

It is our aim to support our landlords throughout their property ownership lifecycle and ensure they survive and prosper, no matter what challenges arise!  Professional advice is now becoming de rigeur for landlords, and is particularly important in the areas of finance and tax.

You can find your nearest office >>> here.

Northwood is one of the largest and most recognised estate agents in the U.K. and the leading supplier of Guaranteed Rent to give landlords complete peace of mind.

Find us on Twitter @northwoodUK or visit our YouTube Channel.

Posted in , ,

Comments are closed here.