Spotting the Next Up-and-Coming Area for a Great BTL Investment

Property can be a great way to generate income and increase wealth, but it requires careful research and planning. You need to know how to spot the areas that will offer the greatest return on investment (ROI) and how to manage your properties so they remain profitable.

This article offers five insightful tips to help you find the perfect buy-to-let (BTL) investment opportunity. And by the end, you’ll have all the knowledge you need to make an informed decision about your next BTL investment.

#1 Evaluate Historical Results

When looking for an excellent buy-to-let investment opportunity in the UK, it’s important to consider past trends and historical data to predict future success. For example, you might target areas like Manchester or Liverpool, which have experienced consistent rent increases over the past few years. Additionally, you’ll want to identify neighbourhoods with growing populations and rental rates, such as the trendy Shoreditch area in East London.

It’s also vital to analyse the local housing market to see if it has a record of reliable performance over time. For instance, Edinburgh’s housing market has remained consistently strong, even during economic uncertainty.

Moreover, it’s crucial to evaluate the income potential of an area, including factors like occupancy rates and vacancy levels. For instance, the student-heavy areas of Leeds or Newcastle might offer higher occupancy rates and lower vacancies, leading to a potentially higher return on investment.

Lastly, targeting areas with a higher proportion of young professionals, such as Bristol or Manchester, can be beneficial as they tend to be more reliable with rent payments.

#2 Use Local Knowledge to Identify Opportunities

One way to identify a promising area in the UK is to tap into local expertise. For instance, contacting estate agents or letting agents in the area can provide valuable insights into which neighbourhoods are up-and-coming. These professionals can offer information on rental demand, price trends, and property development plans.

Another helpful resource is local business networks, including trade associations and chambers of commerce. These groups can provide an overview of the economic landscape in a particular area, giving investors an idea of where investment opportunities may arise. For instance, a chamber of commerce may indicate a particular town or city as an emerging tech hub with increasing demand for housing from young professionals.

Finally, online resources such as Zoopla can help investors identify promising areas. Zoopla provides data on rental prices, which can help gauge the potential return on investment. Other metrics, such as vacancy rates and returns on joint investments, can also point to areas with strong demand and potential for capital growth.

#3 Do Your Research on Local Employment and Demographics

Researching the local employment opportunities and demographics in an area can be a great way to get an overview of what a potential investment in that area can offer.

By looking into the local job market, you can gain insight into whether or not there’ll be actively employed renters looking for housing in the area. Similarly, studying an area’s current and projected demographics can let you know if it’s likely to attract new residents in the future who could increase rental demand.

Fortunately, there are plenty of resources available to help you with your research, including the following:

• Government websites like the Office for National Statistics site provide detailed information on local job markets and employment opportunities in specific postcodes ;
• Online tools like Nomis allow you to quickly scan through various postcode regions for population data, helping you find areas that have promising prospects for buy-to-let (BTL) investments.

Using these tools to research and gather information about a potential investment area, you’re one step closer to spotting great BTL opportunities and making a sound real estate investment offering steady returns for many years.

However, your toolset isn’t complete without Rentila. We’re a property management software offering several benefits to make your “landlord life” easy. Our software helps you keep an inventory of your properties to avoid the hassle of time-consuming paperwork. Contact us here to get started.

#4 Analyse Rental Prices, Vacancy Rates, and Yields

To ensure that your next buy-to-let (BTL) investment in the UK is in an up-and-coming area, one of the best things you can do is analyse the rental prices, vacancy rates, and yields in the location you’re considering.

To check current rental and predicted rates for the future in an area in the UK, you can use websites such as Zoopla or OnTheMarket. These websites provide rental price data and property market trends, giving you an idea of the potential for growth in the area.

Another essential factor to consider is the vacancy rates in the area you are interested in. To find out vacancy rates in a specific area in the UK, you can use websites such as Home.co.uk, which provides a vacancy rate report for different regions in the UK. Alternatively, you can check the availability of rental properties on the same websites mentioned above. For instance, if the vacancy rates are low, there’s high demand for rental properties in that area.

Once you have a figure for vacancy rates, it’s worth looking into yield, which is calculated by comparing the annual rent with the purchase cost of a property. You can use online property investment calculators such as PropertyData or Property Partner to calculate yields for a potential BTL investment in the UK. These digital calculators allow you to input the purchase price, rental income, and expenses to calculate your potential return on investment.

#5 Take a Closer Look at the Location’s Infrastructure and Amenities

Once you’ve narrowed down the area you want to invest in, it’s time to get into the nitty-gritty of that particular location. To help you do this, there are a few things you should take a look at, namely the infrastructure and amenities.

Infrastructure

A great place to start is by looking at the area’s infrastructure.
A good question to ask yourself is: “What public transport links are available nearby, and how often does it run?”

You should also consider factors such as schooling, health services, flood risk, and air quality. These could all be things that future tenants might be considering when they’re looking to rent your investment property.

Amenities

On top of the infrastructure, amenities are also essential when closely examining an area. This can include local businesses, supermarkets, and even local attractions like parks or cinemas. Make sure you take your time when researching these features; it could help get potential tenants interested in your BTL property.

Frequently Asked Questions

Is buy-to-let worth it in 2023 in the UK?

We reckon buy-to-let in the UK is still be worth it in 2023, but it depends on individual investment goals. While capital values are predicted to fall in 2023, many properties saw double-digit growth during the pandemic, and recovery is expected within five years.

Where is the best buy-to-let area in the UK?

According to a 2023 ranking by Simply Business, Manchester, London, and Bristol are among the best buy-to-let areas in the UK. Cambridge and Peterborough also rank high but slightly lower than the other three.

What is a good ROI for a buy-to-let in the UK?

A good ROI (return on investment) for buy-to-let properties in the UK is generally between 5% and 8%, with a minimum of 5% return being desirable for most investors.
The ROI formula = [Annual Rent / Purchase Price] x 100%.

Things to remember

While finding the next up-and-coming area for a successful BTL investment can be challenging, you can do that easily by following the tips outlined in this guide. And while our software doesn’t “predict the future,” we can help landlords manage their existing and future BTLs.

Our platform provides comprehensive tools and expertise to help landlords maximise their BTL investments. By taking the proper steps and utilising our property management software, you can make informed decisions and take a step closer to finding the perfect BTL investment.

So, don’t wait any longer. Sign up on Rentila today to streamline property management tasks and maximise investment returns.

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