Before anybody puts money down on a new property investment there are a number of factors to take into account to ensure that the investment will be a profitable one. Without due diligence (or put simply, doing your research!) there is an increased risk involved with property investment and there’s a chance you’ll get your fingers burnt!
Here is our property investment due diligence checklist that we encourage all clients of CXGInvest to carry out before entering into a property deal:
Check Past Prices:
Checking the value of properties that have been sold in the area over the past few months and years will help you to identify the market value trends. You can also check the average rental value for property in the area to give you a clearer view of what sort of returns to inspect on your investment. You can check recent sale prices and average rental values here.
Check the potential for growth:
This is another important area to check before investing in any property, if there is very little potential for growth in the market then the investment may not seem as appealing as previously. On the flip side though, if the market growth is on the rise then it may be an ideal time to invest.
Amenities in the local area:
Another important aspect to identify is the number of local amenities in relation to the property, including location and quality of schools in the area. If there are an abundance of local amenities then this could well make the property more desirable and thus in term boost potential rental income and/or resale value.
Transport Infrastructure:
It is important to investigate what the transport links are like for the area in which you are thinking of investing as these can have an impact on the rental and resale value of the property. If a location is connected to major cities with quick and easy transport links then it is possible demand for properties in this area will be greater and as such you may expect to receive a greater rental income from the property. Likewise if the property is isolated and has few major roads, buses or trains connecting to larger towns/cities then rental values may be significantly less.
Local Employers:
As with both the local amenities and transport infrastructure, the property’s location in respect to local employers is important to consider. If there are major employers in the area then demand for the property could be expected to be higher than for an area with little in the way of employers, this in turn could lead to greater rental returns on the property in question.
Checking council planning:
You don’t want to invest in a property to then find out that it will soon be overshadowed by a huge multi-storey car park! As a result it is imperative that you check with the local council for any planning applications that could well impact upon the property, it’s views or overall level of appeal.
Other factors to be aware of:
As well as all of the above points it is essential to have an idea of any business rates and local council tax that may be applicable to the property if it is to be used for commercial purposes.
There are numerous different factors that will impact upon the success and profitability of your property investment and you should never go into an investment ‘blind’, doing so will inevitably catch up with you.