Key Factors That Make a Property a Good Investment in the UK

Not all properties promise a good investment. Here are five key factors that can help you identify a lucrative opportunity.

1. Location, Location, Location

Location is paramount. Properties in thriving urban centres, commuter towns, or areas undergoing regeneration often see better appreciation and rental rates. Proximity to good schools, amenities, and green spaces also boosts property value and rental demand. Look for transport links above all – this will help to lock-in future capital growth.

2. Potential to Add Value

A property that requires some refurbishment can be a goldmine. Cosmetic renovations can significantly increase property value, making it more attractive to future buyers or tenants. However, it’s essential to conduct a thorough inspection to avoid properties with hidden structural issues. Investing in a fixer-upper with potential for improvement, such as adding an extension or converting a loft, can lead to substantial returns. Remember, the 3 ways a property generates wealth are: rental income, capital appreciation and forced appreciation (adding value through refurb, title-splitting or any of a number of other means).

3. Market Trends and Economic Indicators

Understanding the broader economic landscape is crucial. Look for areas with rising employment rates, growing populations, and infrastructure projects. Government initiatives and funding can significantly alter an area’s capital appreciation prospects. Look for significant sums entering areas – at least 10s of millions – that could cause significant uplift.

4. Rental Yield and Capital Growth

Evaluate the potential rental yield and long-term capital growth. High rental yield ensures a steady income stream, while capital growth promises appreciation over time. Always buy for positive cashflow – right from the beginning.

5. Motivated Sellers

A motivated seller can provide a great opportunity for a savvy investor. These sellers value a quick and certain sale above all else. This scenario allows investors to acquire properties at a price which makes investment sense. You can try to find these yourself, or use a Property Sourcing agent, if you are short on time.

6. Think to the Finish

Remember that even if you think you have good investment criteria on paper, you have to make sure it’s a viable investment. I.e. – can you actually do it? One useful framework for this is the 3 F’s; Find, Fund and Fill. You should think about whether you can Find enough properties like this fast enough and in the right area? Will that satisfy your longterm goals? Are you going to cluster your properties or go national? Both have pros and cons. You can find a property anywhere, but does it fit with the criteria you set? How hard will it be to find them and actually buy them? How will you fund it? Will it meet the mortgage lender’s criteria? How are you going to fill it? Many investors buy in the cheapest areas only to find that they can’t find tenants, or worse, have tenants that stay and don’t pay – don’t fall into this trap. Yes the yields can look appealing, but any voids will quickly wipe those out. If you can satisfy yourself that you have met all of these criteria, then you are well on the way to your first investment.

Married2Property are a family-run property company that aims to create social good through property.

These articles are written by Darren de Wal based on his 12 years of experience as an active Property Investor, and 16 years getting to a senior leadership position as an Officer in the Royal Air Force. They are for the benefit of those with a general interest in Property, as well as those wishing to start out investing themselves.