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Thursday, January 15, 2015

Where should landlords look for properties?

Where to find rental real estate
The importance of location is well known in real estate
By Michael Liggan

Whether you are a seasoned property investor or you are only just branching out in that environment, where you choose to purchase a property for investment purposes is a key consideration. It’s important to be a little dispassionate about the process.

A property doesn’t need to appeal to your personal taste or be in a location close to your current residence in order to present a lucrative investment prospect. A more important consideration is that your investment yields a good and consistent rental income from reliable tenants.

Matching the property to the tenant

Finding an appropriate property means having an understanding of how a location can attract different potential tenants. For example, students will always look for a central location that is particularly close to university and major restaurants/shops.

Familiarising yourself with the selling points of a property’s location can help you to establish a target market. Searching for popular property areas may also help to identify trends and future rental hotspots.

There are a number of key rules which landlords should follow regardless of which part of Europe they are in. Avoiding the temptation of being lured to a particular area by the promise of high rents is chief among these rules. It’s important to consider the overall calculation of annual rent pitted against the property value to equate the potential rental return. London, for example, may seem like the ideal investment hotspot with rental properties commanding consistently high rents and a seemingly inexhaustible demand from tenants. However in the UK, London rental yields tend to be low because property prices are inevitably higher than elsewhere in the UK, so there’s a bigger shortfall to compensate for.

The ideal combination for any landlord seeking a high yield and consistent rental income is to make a lower capital investment in a popular property type that commands higher rents. Property Guru Michael Liggan commented “Having an open mind about where to invest in Europe is essential. The current economic climate favours buy-to-let lending. Many people, particularly young professionals, are unable to raise a mortgage and gain a foot on the property ladder, which has been a real boost for the rental market.

Identifying where to find the highest yields

Recent research has shown that the highest rental yields are generated by properties in the most densely populated areas outside of Country Capitals. Properties in densely populated city centre locations are in high demand. This is particularly true for young professionals who are unable to raise a mortgage but need to be close to their place of employment and desire easy access to nightlife and entertainment. Regions in the UK such as Birmingham and Kent are prime locations for high yield property investment, where in Spain locations such as Marbella are key for investors.

Landlords can also benefit from high returns throughout the Europe by considering student accommodation. From Bristol to Liverpool in the UK, the student accommodation sector has boasted a consistently high performance. Student accommodation has always offered a safe and secure asset class, as consistently high returns combine with exceptional occupancy rates. The strongest performance in student property tends to focus around Russell Group university towns and cities and Knight Frank’s research into student accommodation suggests investors could expect regional rental growth of 2.75% during the 2014/15 academic year.

These locations attract students from both the UK and overseas to the country’s best performing universities, promising a consistent and lucrative market for any potential landlord.

About the author: Involved in real estate all of his working life Michael Liggan commands a vast knowledge of international housing markets having visited over 30 international countries. You can find out more by visiting his social profiles Vimeo, facebook, linkedin and Pinterest.

Image: Netalloy/OpenClipArt, US-PD