5 ways to spot an investment property

Not all houses are worth investing in – a property expert reveals what to look for and what to avoid

If you were to believe every property show you watched, you’d think investing in bricks and mortar is a sure-fire way to boost your bank balance. And while it certainly can leave you with a healthy profit, you should rush the buying process at your peril.

READ MORE: How to renovate an old house

Whether you intend to renovate, sell up and reinvest in another project property, or embark on a buy-to-let venture, it's important to do your research before you sign on the dotted line.

Property expert Thomas Goodman of MyJobQuote has shared his advice on the five signs to look out for when considering investment potential to ensure you don’t waste your time and money on a property that's unlikely to increase in value.

1. Location, location, location

It’s been said countless times before but that’s because where you buy really does matter. You may be tempted by a cheap property in what you might consider an up-and-coming area, but buying a pricier property in a location with a strong housing market already may be less of a gamble.

Goodman says: “Do extensive research on the area, the demographic trends, and the properties that have recently been sold, in addition to any planned developments. These can all affect property price and decide whether your house will grow in value over the coming years.”

2. Look for problems that can be solved

Goodman is a great believer that there is a solution to every problem, it just depends on how much you're willing to spend.

“Badly laid-out properties can be reconfigured,” he says. “Unattractive properties can be brightened with a new lick of paint, and you can upcycle or replace old pieces of furniture for a brand-new interior."

If you're working with a small budget and want to maximise your return with minimal stress, look for properties that just require cosmetic alterations – and be sure to get a professional survey before you make an offer to check for any nasty surprises.

Replacing kitchen cabinet doors can make all the difference to a tired space. Image: HUSK

Consider what minor changes will make the space more appealing. Sometimes it can be as simple as updating tired kitchen cabinets.

3. Look for eco-potential

Some investors wrongly dismiss a place if it has poor energy performance, but adding insulation and ventilation can quickly turn this around – though the current efficiency should be considered when you come to make an offer on the house.

Goodman says: “If you have the budget to renovate your property, you could call an engineer to add in eco-friendly features, such as an energy-efficient heating system or solar panels on the roof. This will instantly modernise any property and take it into the 21st century, which is bound to increase its value in the long run.”

4. Look to the future

If you're willing to play the long game, it's a good idea to check if the area where you're house-hunting has any big development plans in the pipeline. If so, then holding onto an investment property until the market catches up could be a shrewd move.

Additions such as new schools, new businesses and regeneration projects will make the area more attractive and help your investment grow.

Converting an unused attic is a great way to add value to a property. Image: Oak Furniture Land

But Goodman says it’s also important to look to the future with regards to how you develop your property, too.

He explains: “The down payment for a mortgage may mean you are currently unable to afford a large renovation. However, perhaps there is potential for a loft conversion or a driveway redesign in the future? Planning ahead, and saving towards your goals, will lead you to reap the rewards of your investment later.”

5. Research local demand

While you may know an area is sought after, have you considered what type of property is most in demand? There’s no point buying a one-bedroom flat if the area is popular with families, for instance, while on the flip side, one-bedroom flats may turn a quick profit in areas popular with young people.

Goodman says: “Monitor the housing prices in the area for a while before purchase, so you can see if they fluctuate and will lead to an increase in your investment.”

Image: Ewelina W / Shutterstock