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Countryside, Coastal or Urban Investment? A Must Read if you Plan to Grow Your Buy-to-Let Portfolio

Today, property investors who are looking at a buy-to-let may be considering the countryside or a coastal location as opposed to an urban dwelling and there will always be factors which feature prominently when making this decision.

Buy to let portfolio

Do I need to be close enough to the property to manage this investment?  How much work will it take to get the property tenant-ready? What will the ongoing costs to maintain the property be and is there enough demand in the area to keep my investment paying?

These questions all have ‘time and money’ implications on whether urban, rural or coastal locations are going to pay off! Let’s be honest…buy to let investors are in it for the money!

Where should I be investing in Buy-to-Let?

Proximity to the property would influence an investor on whether they would self-manage the tenancy or have a Letting Agent manage it for them! Self managing landlords may save on average £1,900 a year based on an agents percentage fee of around 10% with associated administration fees. For taking a few hours initially and an hour a month (if necessary) of your time…it is worth it to some investors, particularly those with a lower rental yield.

Secondly, any property bought closer to the landlord will make it easier and probably cheaper to get tenant ready! Landlords with properties in London, SW14 and who live in Cornwall will most probably have an Agent. They in-turn may use a third party maintenance company who will possibly outsource the job to a final contractor. The truth is you just don’t know. You just get the final cost of maintenance which is either justifiable or you mark it down to just doing business. Keeping it local and within your control should always mean less money will be taken from your rental income.

Factors influencing the investment decision

If your decision is to take on a buy-to-let investment and self manage it, then location wise, keep it close to home. You have saved and made money already. If your hands are tied, you just can’t afford the 12 to 15 hours a year then the following considerations on location should be taken:

Landlords should consider the local economy of an urban, village or coastal town. Is industry sustainable? Employment seasonal? Are there any larger corporate employers who offer the location plenty of tenants? Apart from doing local research and answering these questions to ones’ satisfaction, landlords can easily check how long rental properties in the area have been on the market for. Should the majority of properties be listed for more than six weeks it would indicate an oversupply and investing in that area should be approached with caution.

Secondary influences regarding the countryside, coastal or urban decision are properties in the countryside are often more spacious than your typical city centre flat. Therefore, associated rental costs, like landlord insurance, are likely to be an influence. I would find out for oneself if I had a few locations in mind what the price difference is of these associated costs. Based on mortgage costs, rental returns on larger rural properties may not be as profitable as a smaller city centre dwelling. Gardens are often larger in the countryside so would a landlord need to factor in the cost of a gardener in the rent?

When it comes to a coastal location, landlords need to budget higher maintenance costs due to more severe weather conditions, salt corrosion and damage to older properties made by part wood all need to be considered.

Rural properties are often fuelled by oil and/or LPG rather than mains gas. Landlords would need to engage with specific heating engineers that are suitably qualified to inspect appliances that are fuelled by these fuels. Septic tanks and cesspits are often found in rural properties – again, landlords need to be wary of such maintenance costs. Tenants in rural areas often have pets – an additional consideration for landlords who may need to adapt their properties to accommodate them!

Many potential buy-to-let investors may just need to start by adding up the costs and savings one would need to spend or save, look at the sums and make a financial decision on all of the above factors. No doubt the numbers will come out favourably for one of the three locations and that should be that decision made.

If you have any comments or tips for investors  regrading factors that may influence their decision on where to invest, please let us know below.

About Matthew Daines

Matthew DainesAs COO of LettingaProperty.com since 2011, Matthew holds a dual role in management and operations. His strategic, focused and goal orientated experience in achieving results within international, high-profile organisations adds to LettingaProperty.com’s continual success and innovation within the private rental sector.

One Comment

    January 18, 2014 REPLY

    Thanks for the tips. From my experience, a few other factors I take into consideration are: good transportation links, how much work, time and money is required to get the property into a ‘rentable’ state and of course what will the ROI be on the rent. I believe that Buy-to-Let is a long term investment strategy, say 10 – 15 years.

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