A hotspot is either an area or a property (or both), that offers a high-level return or capital growth after investment. So, of course, all investors want to know about hotspots. However, if an area is labelled as a hotspot, then it will be fought over by lots of investors. The high interest in hotpots and competition often means that by the time that an area has been labelled as a hotspot, it is often already too late. This is because many of the gains have probably been made by either people who have owned property in these areas for many years or those who took a financial risk in an ‘up and coming area’ at a very early stage of regeneration.
Hotspots do not necessarily have to be poor areas that are generated into wealthy areas. They are often already expensive areas that become even more affluent. To invest in expensive areas, of course, this means that you require more money than if you were to invest in to an area which is less affluent. However, if you do invest in an expensive area, even though your investment is high, you are unlikely to lose money. If you are unlucky you may not make much, but you probably won’t lose much either!
Areas known to be less wealthy are where the money is made – however, at a much higher risk. For instance, some ‘up and coming’ city areas have been ‘up and coming’ for 30 plus years. Regeneration is often a tough task and many existing residents can be unhappy with the change. Also, regeneration areas can attract huge amounts of investment, this can result in an excess of new builds, dropping the potential for future capital growth. So, when you hear about a hotspot or an upcoming/potential hotspot, do not approach it all guns blazing. Do your research and find out who else is investing. Also, ponder how much time you think the area will take to become much better than it already is.
Before the madness of COVID-19, back in February, Paragon published research suggesting that the Midlands was most likely to see the greatest investment activity during the upcoming year/years. The regeneration of the ‘Northern Powerhouse’ was quite exciting for landlords in the Midlands, many of which were looking to expand their property portfolios. Other central/northern cities such as Manchester, Liverpool and Leicester were all expected to be attractive investment choices rather than cities in the South. But, then, COVID-19 happened.
So, how do you invest now in such a tricky time? If you aim to invest in buy to let, you may have to look for an area which offers you a sustainable, average profit margin. Many investors take months, if not years, looking at the best possible deals when, for now, the best deal is most likely to find something that will make a long-term sustainable profit.
Have a think about what a good investment means to you. What returns do you want, and how quickly do you need them? Are you hoping to supplement your salary or are you into property development full-time? Whatever your goals are, remember that no matter where and what you invest in, the housing market has highs and lows. The most important thing is that you do your research.
To find your next investment property, download Houso today! We have noticed a surge in more properties for investment opportunities on the app across the country. Houso is a property app available on Android or Apple devices.