Local market conditions – like the national economy – can drastically affect your profit margins.
Before buying property, check out the local rental market – number and type of rental properties available, number and size of local companies, road/bus/rail/tube networks etc. All of these can impact on how many potential tenants wish to rent your flat, thus impacting on empty periods and profitability.
Be aware, however, that all of these factors can change over time. In order to make sure that your important investment doesn’t suffer, stay aware of changes in the local market. We learnt this the hard way with our flats to rent in Ipswich.
We did all our preliminary research thoroughly. Apart from checking out the local employment situation and communications, we also contacted various local letting agents; they all told us that flats in Ipswich were far more sought after than houses and that Ipswich flats would yield a better monthly rent.
We therefore bought two trial flats on the Ravenswood estate of Ipswich; the flats rented quickly, as did flats that relatives bought. We therefore “stuck with what we knew” and bought 6 more flats to rent in Ipswich over the next six years.
Preoccupied with other areas of life, we did not reconsider our investments once a host of flats began sprouting up all over Ipswich. Large blocks of flats were built here, there and everywhere and investors were busy snapping up many within the new blocks.
As a result, flats that were once easy to rent now are in competition with many others whilst houses are like gold-dust and rent within a day or two of coming on the market. Unlike other investors elsewhere in the UK, we have not been able to put up the rents since buying the properties 10 years ago whereas, had we taken a sideways step and bought a couple of houses rather than flats, our profit margins would be better.