Offshore property is a great way to boost your investment portfolio, but make sure you have ascertained the property’s viability.
We have always stressed the importance of research when investing in property. In addition to financial planning and due diligence, it’s crucial that you have ticked the features that are widely considered to be necessary to ensure a profitable rental. Here are some important features to consider:
Location and Amenities
The amenities and liveability of the neighbourhood is what attracts the right tenants and determines the amount of rental income you can expect to make. Keep in mind the type of area you are investing in will also determine the tenant demographic – be it students who want to be close to education institutions, working-class families near schools or professionals who prefer proximity to a business hub. The latter, for example, is more likely to earn you more income. Also look at what the neighbourhood offers in terms of lifestyle – shopping centres, restaurants, gyms, entertainment, medical facilities, green areas and quality of municipal services.
Families want to live close to good schools and ideally an area that offers pre-primary, prep and high schools of good standards. It is easy enough to check out school ratings or ask around. A prestigious college or university or an institution that offers specialised study opportunities will attract more students. The higher the demand, the higher the property prices.
The better the job market, the more desirable the location for tenants. Find out which corporates have headquarters or offices in the area and if any other big names are establishing a presence there or if a certain industry is taking hold. Derby for example, the UK’s most central city, has a graduate retention rate of 23%, supported by high quality employers. It’s ranked second in the UK for cities with millennial start-ups and one in eight people work in its high-tech sector. All this equals an ambitious and growing tenant base looking to rent.
Public transport hubs and links are huge drawcards in cities in the UK as many people choose to rather commute rather than pay astronomical prices in the city. Birmingham, for example, is one of the UK’s fastest growing economies – thanks to the ‘Big City Plan’ that kickstarted transformation – and is predicted to see the highest level of growth over the next four years. Construction is underway on High Speed Railway Link 2 (HS2), which will connect London to the Midlands in just 45 minutes and see the creation of five major new stations, which has added to the growth potential.
In some markets in the UK where many of the high-population locations are facing rental housing shortages, rental demand is expected to increase significantly over the next few years, but not every market can boast that. If there are many rental properties on the market find out why. When supply outstrips demand, you can find yourself in a stressful position – you don’t want to be stuck with a mortgage and no tenant. Get a good idea of the average rental income based on your property. Will the rental income cover your mortgage repayments and other expenses?
Security is key. Check if crime rates are increasing or decreasing and what sort of security and police presence exists in the area, as well as things like street lighting and if recreational areas like parks are monitored.
Research which areas have infrastructure development or regeneration plans on the horizon. Derby has been earmarked as one of the key investment destinations in the UK due to the 2030 Derby Masterplan, which is aimed at revitalising every aspect of the city.
Finally, always get expert advice on property taxes, which can vary widely within jurisdictions. Depending on the types of taxes, you may earn less, so make sure you know exactly what you’re in for and when the next increases are due.