Thursday, 30 July 2015
I was talking to somebody last week from Heanor, who was considering becoming a landlord for the first time. I meet many such potential first time landlords and it’s always interesting to see what ideas they have. He visited our office to ask us whether buying a property on Old Coppice Side or Buxton Avenue would make a better Buy to Let investment, and which would offer a better return/yield. He knew the area well, as he lived around there some years ago. He knew that both streets were quite close and that houses on Old Coppice Side were, in the main, a little closer to the park. I confirmed that the properties on both streets let and sell well, but I wanted to do a bit more research to help with his choice.
The average price for a property on Buxton Avenue has been £133,278; while on Old Coppice Side it was 16% more, at £154,813. To better understand the investment opportunities available, we took a look at the rents achieved over the last year. The average rent achieved on Old Coppice Side was £560 pcm giving a yield/return of 4.34%. On Buxton Avenue the average rent was slightly lower, at £537 pcm, with a corresponding yield/return of 4.83%. What with the similar yields, albeit with those for Old Coppice Side a little lower, and the corresponding higher capital growth, in absolute terms, on Old Coppice Side (due to the naturally higher average prices), we found both streets to be as good as each other, as there is only a small difference in the yields/returns, which we would not have identified without the extra investigation. In this case it really comes down to the best available property to buy on the day.
If you are a landlord, whether you deal with us or not, feel free to visit into our office on St Peters Hill to ask our opinion on which property investment is best for you.
Thursday, 23 July 2015
Many investors, especially those starting out, like to consider flats as their first investment…but some of our local towns don’t tend to have too many so I thought I would have a look at Eastwood to see what could be gleaned.
There are over 350 flats in Eastwood. This only represents around 1.2% of the housing stock here, with the national average being nearer 17.5% and the average across Nottinghamshire being around 7%. This backs up the impression that there aren’t that many flats around in parts of our region. The “Luxury Apartment” boom of the 90s and Noughties didn’t quite extend this far it seems. The average price of flats with one or two bedrooms in Eastwood is around £107,000, which is nearly 2% higher than 12 months ago.
You can buy a two bedroom flat in the Elevation Place development on Nottingham Road, for £115,000. If a landlord put down a £20,000 deposit and borrowed the rest, they could achieve around £525 per month in rent. Even after paying the service charge, yield on debt could approach 6.5% per year. However, you must remember that every landlord’s tax and interest rates are different, so it is essential to research your investment carefully before committing. Other established flats in the area have tended to command lower rents this year – typically upto £495 for 2 beds, but equally they are cheaper to buy.
Finally, let’s not forget about the potential increase in capital value of the property. I was looking at those flats in the Elevation Place development, which was built just before the crash of 2008 and found that they have sold for between £100,000 and £114,000 just before the crash but dropped back to around £85,000 afterwards. These have now recovered and more so to the prices of around £115,000 now and who is not to say we couldn’t see further growth in the future.
If you would like some advice about what could make a good investment, please visit our offices.
Thursday, 16 July 2015
In previous articles we have found that ex-council properties such as those to be found on the Cotmanhay and Hopewell Farm estates in Ilkeston and off St Norbert’s Drive in Kirk Hallam can achieve good annual rental yields of over 8%. Yet their average value tends to stay quite stable when we compare this to the average capital growth in non-council areas such as West Hallam which have had a more significant rise.
Nevertheless, a three bedroomed semi-detached property on Queen Elizabeth Way in Kirk Hallam sold for £62,000 in August last year, albeit in need of some TLC and it was sold again earlier this year for £76,000, which is a gross return of 22.5% in less than 9 months which is equivalent to 35% per annum. Another example of good capital growth from an ex-council property is a two bedroomed on Birchover Place (off the Beresford Road) in Cotmanhay which was sold in March of this year for £85,000, following an increase in value of around 16% in just over a year and a half. In this particular case no real work had been done at all as the property was in very good condition with a lovely kitchen and plenty of garden and off-street parking space.
The worst performing property for capital growth in 2015 so far, however, was bought in November 2006 for £200,000 and has recently sold for £153,000. This is a significant decline of 23.5%. However, this was not an ex-council property it was modern detached bungalow, which shows that whatever you are buying, caution is always advised.
If you would like some advice about buying to let, please come and see us at our offices.
Friday, 10 July 2015
A landlord I know has owned a few properties on Mill Road in Newthorpe, for the last seventeen years. She came in to our office to discuss the possible ramifications of the emergency summer budget to her as a private landlord (certainly a lot of discussion on that!) and also discuss the rise and fall of property prices on the street and how this has affected her yield over the years.
In 1997, when she purchased her first property on Mill Road, the average value of a semi-detached house on the street was £36,650 which had a sharp rise to £98,000 by 2004. This rise in value continued, with average values of semis being £125,000 at the height of the property boom whilst a terraced house on Mill Road had an average value of just a little under £100,000. The value of a semi-detached property soon dropped in 2011 to £108,000, with the average value increasing to around £124,000 last year.
When she told me of the rents she had achieved on the street, they seem fairly stable over the seventeen years. She remembers the average rent was £450 per month in 2004 and is now around £550, dependant on the property’s accommodation. Therefore, a landlord could expect a respectable annual yield of around 5.5% on Mill road at the moment.
If you would like some advice with your potential investment, please come and see us in our offices.
Thursday, 2 July 2015
Last week, a couple from the West Hallam area came to discuss potentially investing in property for Buy to Let. One of the most important considerations you will make before investing is the balance between annual return/yield and the annual value increase/capital growth. Mapperley Lane in West Hallam is a lovely semi-rural spot on the edge of the village. West Hallam itself is a sought after place to live on the Derby side of Ilkeston. The average three bedroom semi-detached house currently sells at around £180,000 and rents are roughly £600 or a little more per calendar month.
With this in mind, it was a surprise to find that similar sized three bedroom semi-detached houses on Beauvale Drive, in Cotmanhay in Ilkeston, have outperformed those Mapperley Lane, West Hallam.
This is because a three bedroom semi-detached house on Beauvale Drive can be bought for around £75,000 and the achievable rents can be around £550 per calendar month
The yield which could be achieved from property on Beauvale Drive is around 8.8% per year. When we compare this to the possible 4% on Mapperley Lane, it is 120% higher on Beauvale Drive.
However, we must remember that yield is not the sole consideration when investing in Buy to Let properties. The average value of a three bedroom semi-detached house on Beauvale Drive in 1997 was £23,000, which has since risen by a fantastic 220% in the last 18 years. A three bedroom semi-detached house on Mapperley Lane in 1997 was £48,000 meaning the value has increased by an impressive 275% in the same 18 years.
Interestingly we manage properties in both areas - and both tend to be very popular!
If you would like more information on investing in Winchester’s property market, please call me or visit our offices.