Assetz® News - How the local angle can help property investors

How the local angle can help property investors

26th June 2009 |

Imagine being told that city centre apartments in the major provincial centres were the way forward, the key to an emerging lifestyle trend for young professionals and a great way for property investors to make their fortune, either through rental income or capital gains. Exactly such a story did emerge earlier this decade as such accommodation mushroomed in the hearts of cities like Manchester, Birmingham, Leeds and Liverpool.

Of course, it is now known that there was a major oversupply of such properties and many of these lie empty, with prices falling. One reason many buyers will have got their fingers burned is that by moving into a new market, they had no track record to go on. By definition, a new type of accommodation in a particular location is an untested market.

In an area that is already populated and where most properties are not new-build, the situation is different, since research can be done on a district and its historical trends to gauge how successful an investment might be. Those with local knowledge may be familiar with this anyway.

Commenting on this factor, editor of Property Investor News Richard Bowser said: "Local knowledge is a distinct advantage. One of the mistakes that a lot of naive investors made in the boom period – particularly in 2003 and 2004 through to 2007 - was to buy property outside of their own locality and [they] focused on supply without focusing on demand. [They purchased] without doing enough research or having enough knowledge of the local market." It was exactly this, he added, that saw people make errors in the "gross oversupply" of northern city centre flats and other new builds.

Moreover, he noted, there are many practical advantages for landlords who live close to the properties they have invested in, commenting: "In contrast to that, a lot of good, solid long-term and experienced landlords who have got very good property portfolios - recession-proof - only buy within 15 to 20 miles of where they live, so they are able to control and manage their properties without any unnecessary risks of managing properties from a distance." This, he noted, is useful for practical situations such as when a tenant has a boiler problem or other difficulty.

Those who carry out research can also establish how likely a property is to hold its value, according to Timothy Lambert, head of consulting at property firm Ducalian. He stated: "Buyers must ensure they do their homework on properties and their surrounding area before committing to a deal."

Mr Lambert went on to advise: "Use websites to see how much properties were bought and sold for, average values in particular roads and boroughs for example."

So it seems that good homework and research, or local knowledge are the keys to successful investment. By doing this, those who buy can raise their chances of making a success of their ventures, both by providing a good service that helps retain tenants and through ensuring their purchase is not a home whose value is at risk of the sort of crash seen in the city centre apartment market.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4855.html. Alternatively, please see our full press release archive.