Opinions are divided over whether you should invest in buy-to-let locally, or venture further afield in an attempt to achieve better returns.
The area you invest in should be considered alongside your strategy and goals. If you’re looking to invest in student lets, you’ll obviously want to buy near a large, vibrant and growing University. Meanwhile, investing in a ‘holiday let’ in an area that no one wants to go on holiday to won’t really work!
Budget can also play a part, whereby local house prices are simply too high for you to buy an appropriate property. Many Londoners have to buy outside the city because of this, although many have subsequently rued missing out on the spectacular capital growth London property has benefitted from.
When I began investing in property, I spent a long time deliberating on where I should buy. I tried to find the next up and coming area to invest in that offered the holy grail of high yields and strong future capital growth. In the property boom years, I researched city centre apartments up North, as well as foreign property in Bulgaria, Cyprus, Florida and Las Vegas.
Whilst the glossy brochures promised quick riches, ultimately, I decided that the grass wasn’t actually greener elsewhere. There are in fact many reasons why I believe you should keep it simple and invest close to home.
Familiarity is an important factor. You’ll know where the best areas are, which are the decent schools and the good transport links, along with a knowledge of the upcoming developments that will impact the community. I fear for Southerners buying ‘up North’ in areas they haven’t even visited, bamboozled by cheap property prices and promised bumper returns. For many, they will find the returns on paper don’t match the reality…and there is a reason why the property was ‘cheap’ in the first place.
If you aren’t familiar with an area you should spend time walking the streets and meeting with local agents. Nothing beats face-to-face contact and building rapport with people who can advise and support you. It is obviously easier to spend more time in an area that is closer to you, so you can work out the facts as opposed to relying on third party information.
It is also far more convenient to manage a buy-to-let property close to home. Whether that be overseeing a refurbishment, the on-going maintenance or managing tenants. Having a property nearby saves a lot of time and you’ll typically already have useful contacts that can assist you in this regard, compared to relying on the yellow pages for an area you’re unfamiliar with.
Buying locally might mean you decide to self-manage the property and save yourself the letting agent’s management fees (although that tactic can become a false economy for an amateur landlord). Even if you do hand the keys over to an agent, there’s certainly some peace of mind knowing the property is within easy reach should something go wrong or you simply want to keep an eye on things.
It is because of these reasons that over 50% of landlords choose to buy within 10 miles of where they live. So, if you’re thinking of investing in buy-to-let and would like some free advice about whether your local area can meet your needs, please feel free to get in touch.