Guiding Factors for Property Profit

As a landlord or property investor, the keyword lies in the name ‘lord’ and investor’; the main purpose of holding several properties and housing tenants is to make a profit and increase the said margin. While you cannot predict the profitability exactly, you can pay attention to a few factors which will make it slightly easier to measure whether or not the property price outweighs the surroundings and environment of where you’re buying/investing. Either you buy a beautiful, cheaper property with its own minuses regarding the location, or you purchase a property with a bold price-tag, but in a location even the magazines are gossiping about. Dissect the outlined factors to sway your decision: 

  1. Amenities 
The availability of amenities around the property has a large dictation on the attraction of tenants, based on their gender, profession, age group, and socio-economic background. For example, if your property is within walking distance of skyscrapers where business CEOs sip coffees in a glass block (I’m looking at you, Google headquarters) you’re more likely to have professionals renting your property, and thus, you have more of an option to raise rental prices, but also the added security that your tenants are likely to take good care of your property due to their professionalism. Properties which are surrounded by green spaces or children’s playgrounds will therefore attract families - bear in mind, to fit the criteria, you would likely need to have a 3 bedroom house here (wandering babies need space!) Restaurants or pubs nearby get extra brownie points as all middle-class demographics will be drawn here, while movie theatres, universities, or clubs will be a persuasive acting point for students to rent from you Student housing should be slightly run down or a property you haven’t decorated in glimmer, as alcoholic spills may stain your carpets - just a warning! If your property is within half an hour from a tube-line or train station, that’s another component enabling you to earn more; ‘commuter towns’ such as those in St. Albans or Bromley are never empty.  

2. Natural Disasters
Not many would jump to conclusions and dream that their home has been swept by torrential floods (which blindly do occur in this country) as they will send your insurance policy prices to space, more than Elon Musk can. If you choose to invest in a property that’s in a heavily flooded location, allow room for constant construction works or the increased risk of losing your property as a whole. In Cumbria for example, floods are very common. Factually, in 2015, 45,000 homes in the town had a direct power-cut for five days in a row. I hope the households had scented Yankee candles! Property prices in natural-disaster prone locations in the UK (such as Lancaster and Newcastle) tend to be a drop of a penny in comparison with London hotspots however, with purchase prices in Cumbria being as low as £30,000. 

 3. Crime Rates
The third factor is the safety of the neighbourhood. Higher crime rates don’t necessarily signal lower house prices, but they do encompass lower tenant demand. Some of the locations in the UK with the highest crime rates in relation to population (published by the Office of National Statistics in 2022) include West Yorkshire, and Greater Manchester, particularly for residential burglary. If you invest in a location with a lot of criminal activity, be sure to spend some of your income on security camera systems, and anti-theft prevention devices. 

4. Volume of Vacancies 
Another crucial factor to consider when aiming towards higher profitability is the quantity of vacant properties in the local area. This is an obvious indicator of popularity in terms of other sales and lettings. If there are bundles of agency signs, that’s a location to sail further away from - it shows that the market there isn’t full of heat and rather, has severely cooled. It could also be an indicator that the neighbourhood hasn’t been restored and or has issues with local governmental provisions. There is the possibility of the vacancies making an appearance solely due to the rental prices being extortionate and non-correlative. In this manner, the property may seem to have sparse provisions, but remember that a simple ‘outstanding’ school rating nearby can make the price soar for this one reason, especially where there are private schools.