Residential property investment is as simple as an investment in any structure that people live in; it can be houses, apartments, caravans or even those futuristic Japanese pods. Unlike commercial property investment, when we talk about investing in residential property we do tend to mean buying a property; the most common form of residential investment is to buy a house and rent it out -- to become a famed and often revered buy to let landlord.
Landlord's image and reputation varies across the world, but for the most part they are happy to have the last laugh as they rake in the cash. That said, speaking from a UK perspective, bad landlords are being left with no place to hide thanks to the widespread use of the internet and social media, where landlord naming and shaming sites are becoming increasingly popular. That said, most landlords are neither good nor evil, they are simply professional residential property investors, and in most cases they leave the management of tenants and properties up to management companies. What's more, landlords are increasingly becoming directors of residential investment property companies, offering additional services such as mentoring, public speaking, and more.
But before you can offer any of those things you need to cut your teeth as a landlord, because it is only when you have built a successful empire of residential investment properties that you can even think of public speaking or mentoring (well, for the latter you may get away with it, many certainly have and are doing). So, here is how to make a good residential property investment.
Location, Location, Location
This sounds like such a cliché, but you can't talk about making a good investment in residential property without saying it. Residential property investment is all about supply and demand... Think about it.
There are landlords out there who own properties in town centres that are absolutely shoddy, no central heating or double glazing, yet they make a packet because they are cheaper and so their properties are never empty. The key is to avoid the voids (periods where no rent is being earned). If you buy a property in a location that sees constant demand but supply is limited (town centre supply is limited because of sharing with commercial space and lack of space for new building) you are on to a winner.
But of course, we can't all buy in town centres, so we look to areas that we can afford. The real key is taking it on a deal by deal basis. Finding a property that is within your price range in an area that you think is a good area (most investors will buy their first property locally) and then stripping it to the bare bones.
Research the Locality
You need to find out how good the area really is, because you can be damned sure that tenants will know. Is that school you have heard is good really all that great? What are the transport links really like? Are those famed amenities really amenities, in that do they really benefit the community, are the popular?
Research the Property
You need to find out what state of repair the property is in. Now obviously you will have a survey done, which will identify any structural weaknesses etc. But you also need to find out things like, how old is the boiler, how old are the electrics, the plumbing, is the loft well insulated, are the locks secure, etc etc. All these things have the potential to cost money down the line, which will eat into the cash-flow of the business.
The Right Deal
But if you find the right property, at the right price, in a good location snap it up. Almost all of the property millionaires heading up large companies have started out like you, buying their first buy to let property.
*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.