Home Improvement

Investing in apartments can be successful if you follow these five suggestions

The UK property market has been popular with investors, as “property investment is, by definition, the act of buying a property to make a profit.” There is ample leverage to make this possible, with the changed perspective of real estate emerging after the pandemic. The demand for flexible space for living and working has increased, as the Sittingbourne letting agents will concur. Apartments are increasing in popularity, due to the high real estate prices. Many people have decided to work online, from home, at least part-time while others are opting for full-time. Proptech platforms are assisting investors, property owners and managers to operate efficiently to accommodate this demand. As in every endeavour, there are risks involved that the investor should be aware of.

Here are a few suggestions to ensure that investing in apartments can be successful:

Location:  This is the key factor. Research should be conducted on the location to see which would yield the best ROI (return on investment). Past performance and future predictions need to be a part of this. The rental demand should be assessed vis-a-vis the type of tenant is looking for. If it is students, areas with good schools and universities should be checked. If it is young professionals, urban apartments with high-quality internet facilities, office space, modern kitchen and bathroom facilities would be a plus point. Sites in economically developing areas such as South East England should also be considered. Amenities including proximity to shops, transport, restaurants, pubs, gyms, laundrettes and co-working spaces should be looked into. Usually, the most popular will be the centrally-located apartments in London, EnglandHowever, if the whole building is for rental, the demand can be affected as tenants will have more choice and will try negotiating on the price. It is advisable to check on the ratio of owner-occupied apartments to rented ones.

Type of property:  The condition of the property is a prime factor. Repairs and renovations should be assessed and budgeted. However, more importantly, professional advice should be sought on the structural condition of the building and whether all regulations have been confirmed. Check on whether the building allows flexible rentals with short term and long term zoning. Ensure that planning/building use permissions are in order. Choosing an apartment with a balcony, communal garden area or a terrace could help with the appeal for demand. So could one with more natural lighting and an attractive view, as against a dead-end or brick wall. The level of the apartment could also make a difference, depending on the requirements of the tenants – young students or professionals, families or the elderly.  

Budget and taxes:  The first issue is affordability. Once you have decided on a financial budget, the tax implications, especially property tax and income tax, need to be thoroughly checked. It is advised to take professional advice. Tax incentives for property investors also need to be looked into. Strata fees and building insurance should be clarified. A complete analysis of the investment is required to obtain an idea of the NOI (net operating income) – expected income less operating expenses – to show the potential returns and profitability.

Advanced technology:  In our fast-paced lives, the more streamlined everything is, the happier we are. Managing apartment buildings can be time consuming and expensive. Making the most of proptech is an efficient way of dealing with this. Smart home automation with connected IoT devices not only makes it easier for the owner and tenant but also raises the value of the property as well. This in turn could lead to an increase in the rental.  

Rules and regulations:  All property investors and landlords should be aware of the responsibilities and rules to be followed. Some of these include:

  • Complying with the Right to Rent policy so that the necessary checks are made.
  • Obtaining an EPC (Energy performance certificate) so that the property is energy efficient.
  • Ensuring safety standards are maintained, with regard to fire, gas and electricity.
  • Keeping within the landlord licensing laws.
  • Respecting tenants’ rights regarding privacy, notice periods, retrieval of tenancy deposit and pets.

Conclusion:  Despite the risks involved, the benefits of property investment, especially apartments, are enormous, including the recurring rental income. The freedom and stability to meet financial goals can be exhilarating. Quoting from experts, “Unlike other investment strategies like stocks and shares, property investment can bring you two forms of return on investment through rental yields and capital growth with buy to let”. With the demand for rental and buy-to-let accommodation increasing, investing in apartments can prove to be successful if the above tips are seriously considered.