Where should I invest?

The answer to this question is that the best place to invest would be an area that you have a good knowledge of – i.e. in or near the town that you live in. If you live in the local area you already know the areas to avoid, can get recommendations for letting agents and tradesmen and will probably know other people who are landlords in the area and can help you. So if you can achieve your investment objectives by investing in property near where you live then that is the best area to invest in.

However many investors look further afield to get a better rental return and for better capital growth prospects. Whether you decide that the best area is in London in the Midlands or in the North then it might be a considerable distance from where you live. This creates problems for the property investor. You have to get to know an area and you have to create new contacts with services that you are probably going to need like letting agents. This can be problematic and it isn’t easy to deal with problems on the ground if you are hundreds of miles away. You need to be able to trust the service providers you use and with all walks of life some are better than others.

My view on areas to invest is to try and generate a yield/return which covers the costs of investment and where the capital growth will be highest. Over the last few years the North, areas of central Scotland and Belfast have regularly led the way. London also dips in and out of capital growth leaders. I also like to try and create a portfolio with the minimum investment so Northern terraces with prices at £70 – 80K work well.

I have a lot of experience with Northern Terraces and have done well with them but they do also have some issues. There is a higher level of housing benefit tenants and are in areas with more social problems than other types of investment in more middle class towns. I also have invested in new build flats in Cardiff Bay. They have been trouble free but the capital growth has been very low compared to the Northern Terraces.

Ultimately the decision is yours. What is your attitude to risk? How are you going to manage any problems? And what do you want to achieve? If you buy a house the buck stops with you – it is your name on the deed and it is only down to you to make sure that the mortgage is paid whether the property is let or not. You must feel comfortable with any investment you make and know what to do if there is a problem.