Where should you invest? (Includes my own research process)

Last updated: 26 October 2017

Buy-to-let can be a great investment – but not all buy-to-let investments are created equal.

The specifics of the individual property you buy matter a lot, of course. But the one thing you can never change about a property is where it is. Over the last ten years, property prices in some areas have doubled. In others, they've gone backwards.

And this isn't just at a regional or city level: the area of town you buy in will have huge implications for the success of your investment.

So, this article is all about where to buy. We'll look at:

Home or away?

Like most people, I started investing close to where I lived. Now though, I'm happy to invest anywhere – and have a portfolio spread across the country.

That is unusual, and I'm not saying it's the right thing for everyone. But I would say that it's not a good idea to buy locally “just because”.

After all, what's the chance that you live in the absolute best part of the country for property investment? And even if you don't need the best, what if (for example) your strategy requires you to buy high yielding properties and they're not available in your area?

Of course, all else being equal, local is easier: as well as saving on travel time, it saves building up that real “local's” street-by-street knowledge in another area. And if you're going to be extremely hands-on with either refurbishment or management, you'll want to keep it close.

So deciding where to buy starts with the decision about how far you're willing to go. If you want to keep it very local, that's your decision made. But if you choose (for example) a 45-minute radius – or even “anywhere” – you've got some narrowing down to do…

How to choose an investment location

With a large geographical area to choose from, you need a way of cutting down your options. Even if the method is somewhat arbitrary, it doesn't matter: you'll never be able to research every single UK postcode and choose between them, and if you try you'll just get stuck in the research phase for years.

Some methods of narrowing down the field include:

Those filters might leave you just one city or town to investigate, or there might be four or five to dig deeper into. Either way, it's more manageable than when the choice was “anywhere”.

From there you can either do some deeper desktop research to choose which you think has the best potential, or pay a visit and meet some local agents to get a feel for which excites you the most.

Where not to invest

Even if you have family living there or it's super convenient, there are some places that just aren't going to work well for property investment.

Those areas include:

All of these can work: there are people being successful with property everywhere. I'd just consider them more challenging for the average new investor to find safe opportunities where the numbers add up and the management should be straightforward.

From city to area: my process

So you've got a city or town. The next question is…which area of town do you want to invest in?

Even in the smallest towns, there will be multiple areas with distinct characteristics: the “family” area, the “cool” area, the “feel like living dangerously” area, and so on.

Assuming you know nothing about the place you've chosen, how do you figure out what's what? I'll share the process that I go through: it's not particularly scientific, but I find that it gives me a good general understanding in very little time.

From area to street

You've gone from city-level to area-level now, and you're developing a degree of street-level awareness as you'll pick up on “pockets” where prices suddenly change.

This should be enough to narrow your search down to one or two areas where:

Next, you'll need to start really building your street-by-street knowledge and getting a lot more precise.

You can continue this online, but this is a good point in the process to either spend some time in the area yourself, or speak to local property professionals – or, preferably, both.

If something you're told contradicts your own research, trust what the agent says (and it's not often you'll see that recommendation). Again, don't put too much stock in what one person is saying, but if you're repeatedly being told the same thing then chances are it was your broad-brush research that led you astray.

Conclusion

With your street-level knowledge building up, you're finally in a position to start viewing actual properties.

That means that beyond looking at areas, you'll need to assess the strengths and weaknesses of specific deals: read my article about how to do exactly that.