Before you buy a property in a new area, it is always wise to test for demand. Ultimately the return on your buy to let investment will be driven by the rental value you achieve for the property over the long term – which itself will be dependent on tenant demand. There are various ways to test the tenant demand for a property in a particular area.
Speak to local agents and see if there is a demand for that type of property. One thing that is worth doing when speaking to agents is telling them at the outset that you will be self-managing the property (irrespective of whether you will use a letting agent or not). Some agents may not wish to speak to you but the ones that do may be more honest. It’s your job to read between the lines but you should soon be able to work out which agents know their stuff and which don’t.
You can also phone up agents as a tenant inquiring about similar properties. You can find out from them if they have many similar properties and whether they generally rent quickly. Again, you have to take things with a pinch of salt but if you can cross-reference the information you get from the research on the internet portals (below) you may begin to start getting a good idea of the type of demand for various types of properties.
Spend (a lot of!) time on Rightmove and Zoopla, You may find it useful, if you have two screens on your desktop to have one screen with sales and the other with lettings. This will not only give you an idea of rental income but also which streets seem to have many properties and which don’t.
In the picture above you can see as an example 2 bedroom houses on sale on the left-hand screen and those to let on the right hand. You can quickly click on individual houses close to each other to get an idea of sale prices and rental values to see if the deal stacks up and meets your requirements. It also gives you an idea of the number of properties that are available to let in that area and hence the competition you would be up against.
Also, use the portals to see how long properties have been on the lettings market to see if certain types of properties are letting and others aren’t.
Join the local Facebook groups and Twitter for the area and ask other landlords for advice on which areas are worth buying and types of properties.