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the main reason normally is houses are a lot cheaper and yields can be amazing. but you have to be willing to do a lot of work and lots of headaches along the way
`Bad` and `areas` as you say are words open to interpretation of course
They are personal to the individual
They should be defined in a little more detail i think
There are bad estates in good areas and good estates in bad areas
But what is "Bad" ....?
Is that bad as in badly constructed , bad crime , bad people , bad yield or bad areas for growth ?
And what is an area ?
Is that an area as in a particular road on an estate , an estate , a town ,. a region , a country ?
I can pay £100K for well constructed flat in anti social area but within 1 min of the city centre
The prospect of growth though is very good and if the council clean up the area then quids in
Or I could buy a poorly constructed flat in an affluent area and make my money there
So many factors to consider ....
When I was going through this exercise of where to invest and what to invest in, I listed all the variables I could think of and then applied an arbitrary score out of 10 which was applicable for me and my thinking. Everyone`s personal score will be different.So for me within 10 mins travel distance scored 10 as this was very important to me where as for others it might score only 5. I also didnt mind low grade estates with relatively high crime levels and rubbish on the streets and effing and blinding . I made more money because I didn't mind that aspect and could blank it out .It's a bit like paying yourself danger money and everyone has their price.If you like the idea of paying yourself on paper £100 an hour rather than £50 an hour but in return you have to listen for 10 mins to a rap group blasting out the window at 1000 decibels and the smell of cannabis when you walk through the communal doors and a heated domestic in the hallway then go for it . 10 mins work for £50 aint bad.Many wouldn't of course especially if they self manage and not cut out for any form of confrontation . fair enough . But some of my clients have never even visited their properties and wouldn't want to, so a bad area in terms of ASB its not really an issue for them. Same flat same estate but an entirely different perspective . Their investment is just a spreadsheet and I take that fear factor away from them and am represented as 10% on their spreadsheet .I am therefore the opposite to them in some things and our score out of 10 charts would look very different but be right for both of us also .I personally would never invest in the NE as i would lack control and the ability to do forensic DD , So NE would score 1 on my chart .To others who live there like DL maybe 10 and even to a London investor it might score 8 because of say the yield factor and they are happy to put it in the hands of an LA and pay their 10%
So we all have our strengths and weaknesses . There is no right or wrong .
So I suggest just analyse yourself first and you will have must haves in there and def no no`s
Then its just taking a view of the stuff in the middle ground which scores 4/5/6
Your mind and your critical thinking processes will take you to your eventual answer .
Thinking is free
Good Luck !
Jonathan Clarke. http://www.buytoletmk.com
For me it largely comes down to knowing the area and tons of dd and just general research, as Jonathan stated if you are likely to be dealing with your tenants personally then that needs serious consideration too.One of the wealthiest landlords I know who lives locally to me, bought most of his properties in areas that I would consider bad. He has a far different approach to being a landlord to me, but from what I have seen his rental yields are high. But he also doesn't refurbish the properties he buys to a modern standard, if it has a bathroom suite in place it's fine (even if it is pink and about 40 years old). Recently he posted to social media two separate tenancies that ended in the places being trashed and huge rent arrears, so it's not all just big rental yields for him.Also to me (at least locally to me) if a place has to be boarded up when it's vacant that is of a concern. Especially if your rental return is going to be sub £5k, because if anyone breaks into said property during voids you will likely lose your profit for a year and then some.
The landlord I was talking about bought a lot of properties in Grimsby over the last couple of decades. I heard of many horror stories from a couple of the guys he hired to repair the properties after either tenants wrecked them or they got wrecked during voids. One thing he definitely benefited from was having some cheap and cheerful tradesmen who would sort the properties out on the cheap.I heard how once after a tenancy, I think it was during a void, a property got totally gutted all the pipework and even some of the floorboards were taken.
Some related threads:Would you buy the..worst house on best street or best house on worst street? Why higher value properties are better A true lesson of BTL from the North East ...
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Bad areas can become good areas and good areas become bad . Its all about knowing the property business and understanding the local and region implications for property.
Poor areas will attract poor tenants. Your applicants will probably be vulnerable people without stable income. If you are lucky you may get someone in receipt of benefits, if not, their earnings will simply not be enough to cover the rent. So that is the tenant pool that you will have to choose from.
If you rent to such tenants you cannot rely on the rent being on time and that your property will be looked after.
Now your yield on paper may be 15% but that in reality may equate to a monthly cashflow of £150, which you may not actually receive.
``Poor areas will attract poor tenants`
Not necessarily .
Some good working tenants rent in poor areas for several diverse reasons
Tenant selection is key