To be a successful investor, think like a tenant
According to renowned property entrepreneur Arv Soar, director of Property Investment Portfolio, too many potential investors are thinking about the sums required to get on the investment property ladder and not enough about the people who will rent their properties.
Arv, who has his own portfolio worth over £22 million, and sells Buy to Let packages to investors, claims that it’s not all about getting the right finance package or working out yields, but taking time to look at the tenant profile who will ultimately make the investment pay.
The first thing that investors need to consider is who is going to rent their property. For example, if it’s a large house with lots of bedrooms and bathrooms it could work for students, whereas a more suburban three bedroomed home would more suit a family. This may sound simple, but you have to match the profile and put yourself in their shoes and ask - could I live here if I were them?
When you have decided on the tenant profile for your home, and have ascertained that they will each have somewhere to park, sleep, cook and use the bathroom, you next need to think about where they are going to work. Rental populations travel mostly with work, so if a major multinational sets up in town, you know that there is going to be a rental demand.
Take a drive around town, read the local business pages and look at the scale of the public sector workforces in the area, as these may be your tenants’ employer. The more there are, the better the rental prospects. Also don’t forget to look for new business park developments and find out about future development plans – it may be worth getting in early if plans have been granted for a commercial development, which will soon require a workforce, and they, somewhere to live.
The next thing to consider is how your tenant is going to get to work. If they have a car, can they park it somewhere safe? If they are going to use public transport – is there any? Regular bus routes are great as they cover both work and pleasure travel for tenants, and failing that, close proximity to a train station increases tenants’ employment catchment area as well as multiplying the likelihood of you letting the property quickly.
After work there is leisure time, so you need to be sure that the area in which you buy your property is well serviced with access to supermarkets, shops, bars and restaurants. It doesn’t have to be Covent Garden, but it does have to be within a short walk, bus ride or drive to some shops.
Tenants are rarely long-term these days, but it’s essential to give some thought to the neighbours. Try to find out who lives next door and ask yourself if they would make nice neighbours for your tenants. Nothing is forever, but you should ask yourself if you could live next door to them, as if you will be resolving constant disputes with them – you may as well be living there!
