Some useful pointers here about basic desk research on a property location to help with area-based investment checks
In addition to the items listed, we could also look at recent comparable sales (e.g. via Rightmove or Zoopla) and rental figures (again Rightmove could help but even better is to speak to one or two local agents). Zoopla is also good as it shows any price reductions and if you really want to understand the history of a particular property listing then check out Property Bee. An indicator of supply and demand is to use the include under offer and sold STC filter – without the filter shows only available listings whilst with it also includes transactions being completed to get a feel for the ratio of listed property to sold ones. Auction sold lots and prices are a good indicator for investment property also – the EI Group can assist here. What is more difficult to assess is the value for condition perspective i.e. a done up property vs. an in need of modernisation one - there would be a premium for the former.
Other useful sources include data on crime, schools and transport links such as purelocation.com or socio-economic data from checkmyarea.com
In terms of how to measure a potential deal's effectiveness, yield is the bread and butter for the residential property investor but as said elsewhere is only half the story - a combination of capital growth rates and rental yields and trends need to be taken into consideration together and sites such as Rightmove and Zoopla are good to get a picture of this. Return on cash invested (ROI) is also essential along with net monthly cashflow and for me return on debt is an important factor as I seek a margin of protection against surprise interest rises.
At the end of the day the desk research only goes so far in helping to profile an area - I was recently looking at a specific property deal a long way from home and fortunately had a contact based locally, who was happy to give me a local opinion - he flagged that the property was in a area notorious as a red-light district which was invaluable information...to not proceed I hope you realise!
One final point here that has not really been highlighted is that of discounted property or added value property. Buying at a discount can help with the returns no end (as well as protecting in case of market falls) and equally finding property that has scope to improve its value (e.g. via loft conversion, extension, etc.) will again improve the returns. These are much harder to secure, not least of which as many investors are looking for these already.
The best advice I can offer here is either have a significant cash fund or pre-approved finance facilities ready to act quickly and search through auction listings and the property portals looking for undervalued properties, empty properties or in areas where conversions and extension precedents have been set. Similarly, agent data on the portals showing number of listings and time to sell is useful to get a picture for demand – long lead times could lead to lower offer potential for example. Also, looking for properties that have been on the market a long-time could be a useful hunting ground (e.g. > 6 months).
Another approach could be to find (via the net or directly) or attend network meetings and online forums to identify property sourcers that have access to off-market properties such as repossessions, retiring landlords, developer discounts and such like. Be careful with sourcers though – always do your due diligence on them and also on the properties concerned as sometimes all is not as it seems…
Back to the desk research now myself!
Source & credits: Property Geek
[…] research and due diligence than these steps, which I have commented on several times, for example here & here, although this desktop property research exercise should be enough to get an idea of […]