The 'des res'
You probably know within your own home city or town which areas have and will always be popular. 'The Posh End of Town' will always command a premium price over other areas. Sometimes, these higher prices are down to the fact that this area has better facilities or maybe the pattern of development here has led to a better environment: wider roads and green spaces, for example. The style of architecture and age of the buildings can also impact on a particular area's desirability. If you know which areas are the most sought after, then property in these areas should always be on the radar – providing you buy at the right price.
If the area has been and continues to be popular, then unless something unexpected happens, it will always be so. These 'des res' areas become a self-fulfilling prophecy. Because people want to live there, businesses will locate themselves there. Nicer shops and restaurants will open, safe in the knowledge that they have a catchment of well heeled customers close by. If your property falls within the right postcode, then you will find that it holds it s value better in these locations. Owner – occupiers will aspire to live in this area and tenants will feel privileged to rent here, so you will always find buyers and renters for your property.
The trick is to not get too carried away and pay too much for your property in these locations. If it is a desirable area, sellers may be inclined to pitch the price above what even the local market can command, and chance that they may get lucky. Do your research and know what price to pay, and do not get swayed into paying a premium over and above what the location commands.
In prime locations, keep your eyes open for:
New build projects – where you may be able to buy 'off plan' and therefore get in at a discounted or undervalued price. (Be careful not to get caught up in the sales hype)
Renovation projects – perhaps a change – of -use property (IE, a shop, church, school or commercial building that can be converted into residential buildings)
Land to develop – you may be able to buy a plot of land where you can build a property.
Anyone with children will tell you how important it is to live in a catchment area of a good school / Parents will readily relocate their whole lives to live in a property that falls within the catchment area of their preferred school. Even if you are not a parent, it is worth taking some time to research which schools are the most sought after in any given location. Clearly, if your strategy is for corporate rentals or even student rentals, the proximity to the best schools in the area is going to be irrelevant. But it will be important if you are going down the route of traditional investment property. And if you are investing in a large home suitable for a family, then this factor should be high on your list of things to consider.
Universities, hospitals and employment pools
Universities, hospitals and other large employers have one thing in common: they bring with them an abundance of would-be tenants, all looking for property close to where they study or work. In the case of universities, students will want to live within very close proximity to their university, among fellow students. If they are not close, the property will need to have very good transport links for it to work as a student rental. The same is largely true for hospitals. The nature of the work involved here (shift patterns etc) means that many hospital staff will prefer to live within easy reach of the hospital site. Again, the location of the property must fit the strategy you have chosen.
Supply and demand
This is a very simple rule to follow. Buy in areas where the supply of property is less than the demand. Very obvious, I know, but again inexperienced investors still get this wrong.
If you are looking to rent out your property, find out what competition you will have from other landlords. The same goes if you are buying to sell. You need to know what there is more demand for in the area you are considering and supply it! This will put upward pressure on prices.
Buy near water
There are some property investors who always look to but near water. This may not seem to be an obvious strategy, but it is one that makes a lot of sense. The thing about water is that there will be a limited number of properties that can be located near it (and when I say near it, I mean walking distance). Properties with sea views will always be in higher demand than those without. People like looking out at water. It is aesthetically pleasing and, of course, guarantees that you are not going to be overlooked by other buildings.
Obviously issues such as coastal erosion and flooding need to be assessed, but in general there are profits to be had in being by the sea or river.