The Basics of Property Investment

Posted By Truffull August 31, 2020

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Starting Out

Venturing into the world of property investment can seem daunting to some but often to many buying a property as an investment can be exciting and a lucrative proposition.

There are several reasons why people turn to property investment however for many the biggest factor is to provide an additional income stream and to achieve capital appreciation upon a future sale of a property.

This guide provides you with useful hints and tips on the next steps before making that first investment purchase:

Research your desired location

It seems obvious however becoming familiar with the local property market area you intend to invest in can steer your overall investment objectives and pave the way for future investment opportunities in the same area. Knowing what changes are being made to the area could impact on whether you proceed with a purchase or not.

For example you are considering to buy a mixed-use investment opportunity consisting of a ground floor shop and a flat above however through reading press articles and talking to locals you become aware that a brand new shopping centre is in the early phases of being developed nearby.

  • How could this potentially affect the current retailer who may become your future tenant?
  • Would this be a positive step for your tenant or perhaps draw business away potentially forcing a future closure and the shop becoming vacant?

This is purely an example but the underlying principle being to research and assess the impact of local factors that may ultimately have a long-term effect on your future tenant(s) which will affect your investment in the long-run.

Assessing market and rental values nearby

Browsing investment properties online will provide you with an overall idea on the asking prices and rents in the area you are seeking to purchasing in.

Properties listed on Truffull will give you further insight on the prices you will be likely to pay in the present market and Truffull provides further tools and resources to assess property prices against the rents achieved or future rents that could be achieved on a particular property.

Rents are often varied from one property to another for a variety of reasons therefore having information from more than one resource can give you an overview into the overall rental level in the area you are looking in.

Compare your desired return on investment (yield) against current local market conditions

A rental yield is the return a property investor is likely to achieve on a property through rent. It is a percentage figure, calculated by taking the yearly rental income of a property and dividing it by the total amount that has been invested in that property.

As a property investor you will have a desired return in mind however it is good practice to determine if this figure is realistic and achievable in the market you are seeking to buy into.

Having a good understanding of yields in the area you are buying in will help steer your offer to agents or private sellers as well as keeping an eye on where rents and other outgoings need to be in order to not lose money on your investment!

Assess a handful of property investment options based on key indicators prior to purchasing

It’s easy to be drawn into the first property you see at right price however it is good to assess a few other options to ensure you buy the right investment suited to your requirements.

Once you have highlighted potential options you can compare and contrast each property against each location, rent received, quality of tenant in situ and yield. Each property you narrow down will present different characteristics and as an investor it is your decision on which property best fits your investment criteria.

Truffull is a valuable asset to you as a startup property investor in which you can browse investment and development opportunities across the UK both on an off-market with some properties being advertised exclusively through Truffull.

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