Tyler Ward Letting Agents View : What What Type of Property Is best for BTL and how to find out

Quite often clients in Reigate ask me as a letting agent, what type of property is best for letting and in particular, how many bedrooms should the property have.

In truth there isn't a single right answer for this, it all depends on demand and supply and every area is different.

For e.g some areas have such a shortage of 3-4 bed family homes that even though the cost of these are far greater than a 2 bed flat, they go immediately.

However it would be fair to say that family homes are in high demand in suburban areas that have good schools and good transport links to the main city centre's where the offices are situated.

As a generalisation, one and two bed flats are in most demand, particularly in high employment areas as many young people migrate to where the work is.

However some areas, particularly in the midlands and the north have suffered from an over saturation and over supply of new build one and two flats. This has had the effect of not only suppressing rents, but meant that in some cases rents have fallen.

Many BTL investors assume, as I did many years ago, that two bed properties are better to let than one beds, because intuitively, people prefer more space.

However in general, I have found the opposite to be the case because most tenants want the cheapest rental property available and are not willing to pay the extra premium for a two bedroom property.

This is, surprisingly the case in Reigate, which given the affluence of the local population, seems strange at first glance.

However when you realise that most people that rent one bed flats are young workers moving to the area or couples moving in together for the 1st time, then this fact is less surprising.

How To Test The Market

I would hope that before you purchase a property, you would take an in-depth look at the locality and do the usual review e.g amenities, transport, schools, large companies based in the area etc.

However I have found the best three ways to find the right type of property to buy is

a) talk to good local letting agents and ask them what will rent the quickest

b) Place test adverts in the local paper to see what the response rate is for different types of property assuming that the market price is being charged for each type of property.

c) old fashioned market research- stand near the station entrance and ask!

In reality a and b are normally sufficient!

Once you know this, you can follow on and stack the numbers. This is something that will be discussed in depth in a later post

The lesson to be learnt is to not rely on assumptions but test actual data

see you soon