Question 5 – What Type of Property Fits My Strategy?
Hi, Peter Jones, chartered surveyor, author and property investor and in this short series of videos we are looking at the twelve questions which I think every property investor should ask themselves when they begin in property and regularly as they go through their property journey. And the question we are going to think of in this video is “What type of property fits my strategy?”
Now hopefully if you’ve followed the previous videos, and if you’ve followed the steps that those videos imply, you will have thought about why you want to be in property, what you are trying to achieve from property, how much time and how much money you’ve got to put into property and what strategy it is that you want to actually follow.
So when you know the strategy that you want to follow in property then you can start thinking about the type of property that you might need to buy. And this is so important because I meet so many investors who just go off and they buy randomly; they don’t really think about why they are buying at all, they certainly don’t buy with a strategy in mind, they don’t buy with their overall outcome or what they are trying to achieve in property in mind. It’s just kind of like oh there’s a property, you know it’s one which is close by so I can manage it or it’s in the street which I know or it’s just around the corner or worst of all it’s the type of property which I’d like to live in. It doesn’t really work.
You need to be finding the right type of property. Now as a general rule of thumb if you want to buy property for income you’re looking at cheaper properties. Why? Because generally speaking cheaper properties return a high yield. That is because mathematically speaking the return on a property is the rent divided by the purchase price or the value. So you can imply from that and you can see from the maths that basically cheaper properties give you more money back. You get more money for your money from a cheaper property.
If you’re buying property and you’re buying perhaps because you want to create equity or capital you might want to buy properties where there is a better chance of it going up in value. Now to be honest with you I don’t really see that as being investing. If you’re hoping that the property is going to go up in value that’s really speculating and not really investing but if that’s the route you want to go down then probably you are looking for more expensive properties. Why? Because it’s more expensive properties that tend to go up in value.
But ultimately the type of property you are going to buy is going to depend upon your strategy. So for example if you want to do HMOs; houses of multiple occupation, you might be looking for large terraced houses or large semis for example or large detached Victorian villas; double-fronted villas with two bays that you can split into rooms to let out separately and they need to be of a size and the accommodation needs to be arranged so that that would work for example.
Or perhaps if you are wanting to do, I don’t know, commercial conversions, you’ve obviously got to find redundant pubs or redundant office buildings.
So the strategy that you want to follow is going to very much determine the type of property that you are going to be looking for.
So I hope that helps.
Here’s to successful property investing
Peter Jones B.Sc FRICS
Chartered Surveyor, author and property investor
PS by the way, I’ve rewritten and updated my best-selling eBook, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same. For more details please go to