Buying to Rent in Eastwood... What’s your plan?

 

Some experienced landlords and I had a discussion about the property market in Eastwood, when the subject of risk against returns arose.

All landlords are different in the way they deal with property. Some landlords prefer to accept a modest yield/return on their investment for an increased certainty of finding a quality tenant. Other landlords are interested in high returns, with a greater risk with regards to the quality of the tenant. Before you start getting involved, it is a good idea to have a plan.

For a low risk investment, you could buy property in and around the areas of Eastwood which are perceived as being more desirable, such as Mill Road and out into Newthorpe and Giltbrook, where you may be able to achieve an annual yield of around 4-6%. Following my article a few weeks ago, if you don’t mind a slightly higher risk of void periods or a more varied quality of tenant, you are likely to be rewarded with a higher annual yield of 6-8%. This level of risk can be typically taken with cheaper terraced houses around Eastwood, in Lynncroft for example, or the ex-local authority properties off Queens Road South. If you are after annual yields of 8% and over, you could take more of a risk with houses of multiple occupancy or properties in the poorer areas of town which may attract tenants of a low quality. We manage some HMOs across the area and if they are well presented, well positioned and well managed – they will attract employed tenants and they can be very good income-earners for landlords.

If you would like any advice on choosing properties, come and see us at our office or email us.

 

 

Bargains in Duffield and Belper

We always like to keep an eye on what if happening in our local markets, which is helpful for when landlords decide to pop in and ask our advice, but also helps keep us close to the latest trends.

Looking in and around the Belper area I found that a four bedroom 1920s semi-detached property on Ecclesbourne Avenue, in Duffield, was bought for £265,000 in the Autumn of this year. The same property sold for less than £25000 in the Summer of ’98! This is 963% or almost a tenfold rise, a ten-bagger or just a plain 1000%! However, prices in the town during this same time period, some 17 years, rose by 179.6%, so it should have sold for a little under £70,000 if it kept up with the towns average house price. This could be down to that highly potent mixture of buying property a little under-value, adding value and modernising, then letting time do it’s work. Whatever happened here though that is a staggering rise!

Meanwhile a 3 bed detached house on Eyam Walk sold for £110,000 in May 2014, and was sold again this August for £125,000. This is a solid rise of 14%, but average prices in this time have risen by a little more at 17.3% in Belper.

Finally a 1900s 2 bed semi-detached on Belper Road sold for £124,900 in January 2013 and then sold again £158,000 in September of this year a decent uplift of 27% or around 9.2% per annum.

With both owner-occupier and rental demand for quality properties in these areas always being strong, it’s worth keeping an eye out for the next bargain.

Our expertise is in the residential property market, so please feel free to talk to us about our area or any properties you may have your eye on.

 

New-Build Developments off the Heanor Road

 

 

What with many builders in the region starting to go into over-drive to build their developments, I often get asked about new-build developments so I thought I would look at some in the Heanor area. Looking at some of the new build developments that have sprung up off the Heanor Road leading out of Heanor and towards Smalley, there are two that are rapidly being established now – Smalley Pastures and Smalley Manor.

Smalley Manor, being built by William Davis – a privately-owned family business – consists of 2, 3 and 4 bedroom properties and is located behind Marina Road and the Grange. Meanwhile, Smalley Manor, being built by Peveril Homes, also has a range of houses and also some smaller bungalows.

Typically, it generally takes a short amount of time to let properties on such new-build developments. Tenants love the fresh appeal of crisp, newly built properties and whilst they will still consider the proximity of the local amenities and transportation links, they often will compromise a little to get into a new home. They are not unlike house-buyers in this respect, many of whom will “settle” a little in terms of location (and size/space) in order to acquire a newly-built abode. Both developments are on the convenient side of town for access to Derby, close to Heanor Gate Science College and are only a mile or so from the centre of Heanor itself.

A three bedroomed semi-detached property or townhouse, could be purchased for around £180,000 to £200,000. The rents that could be achieved for these are between £595 and £675 per month. This means landlords can potentially expect yields of around 4.5% per year. When this is factored into relatively short voids and good growth prospects, especially as the states mature, these levels look reasonable.

Two bedroomed houses have been reserved at around £130,000 and they typically can let for between £525 per month, meaning yields of around 5% per year are achievable.

If you have already done a search for property or are trying to figure out where to start, we’re happy to advise on properties before you buy. It’s in your interest that you purchase something that can let, whether you are currently a Spruce Tree Lettings landlord or not.

Is Buxton Avenue Heanor’s sleeping giant?

 

A landlord recently missed his chance to buy a nice three bed semi-detached property on Buxton Avenue, in Heanor, as it sold quickly. He asked me if there something special about the area, so I did a little research.

I have included roads surrounding the Buxton Avenue area such as Sunningdale Avenue, Owers Avenue and Coppice Drive amongst others in my findings. Many of these properties were built around the 1950s.

A number of the three bedroom semi-detached properties have sold in the area for between £90,000 and £135,000 in the last two years. Remember though that to prepare a property as a rental investment could take additional funds and depending on the work needed could be as much as £10,000, or more, so some of these properties may have needed some care and attention.  These properties would achieve rents of around £495-550 per month, which would provide a reasonable annual yield of around 6%.

The three bedroom semi-detached properties in the Buxton Avenue area are now asking a minimum of £125,000 and upwards. The older houses offer the tenant and buyer larger rooms, which can be more appealing.

Even though the purchase price is heading upwards, the rents being achieved are also edging upwards, meaning the annual yield is still good especially as the houses have seen great increases in value and are popular with buyers and tenants.

So, if you would like to talk to us about property in our area please feel free to visit our offices.

Ex-council properties in Ilkeston... Are they good buy to let investments?

 

In previous articles we have found that ex-council properties can achieve good annual yields of well above 7%. Yet their average value tends to stay quite stable when we compare this to the average capital growth on the more modern estates of say Shipley View, which have had a more significant rise.

Nevertheless, a three bedroomed semi-detached property on Beauvale Drive sold for £88,000 in April of this year having originally sold for £65,000 in 2011 which is a return of over 35% in less than 4 years. Another example of good capital growth from an ex-council property is a three bedroomed semi again on Beauvale Drive which was sold in 2011 for £103,000, following an increase in value of around 30% in just over two years.

The best performing property for capital growth in 2015 so far was bought in September 2011 for £69,000 and has recently sold for £160,000. This is a significant return of 132% - or over 25% per annum. However, this was not a typical rental property, it was a detached house on Cotmanhay Road!

If you would like some advice about buying to let, please come and see us at our offices.

Ilkeston Property - Do you know the Facts and Figures?

 

 

Here at Spruce Tree Lettings, we can guide you to the right places to identify property values and yields in Ilkeston and other useful property related information so you can make sure you get all the information you need about your future investments. Here are just a few property facts about our town of Ilkeston....

In the DE7 postcode there are 23,090 households, of which 26% are detached, 40% semi-detached, 32% terraced and only 2% are flats (half the county average in Derbyshire). Some 71% of all these properties are owner-occupied and around 15% are privately-rented. Looking at the sales activity over a quarter of all those houses (7,179 to be precise) have changed hands since 2005.

Compared to the national average - Ilkeston has 10% more detached houses, 20% more semi detached houses, about the same percentage of terraced houses and 89% less flats. This is a good indicator that Ilkeston is good place to buy property in.

If you would like more useful facts and figures pop in to see us at our offices.

Rents Remain Steady on Nailers Way, Belper

 

A landlord I know was interested in properties on Nailers Way, in Belper. She came in to our office to discuss the value of property suitable for renting on the street and how this has changed over time in terms of the yields one can achieve.

Looking back over the last 10 years, between 2005 and 2007, before the 2008 slowdown, 2 bed terraced and semi-detached houses tended to sell from around £95,000 depending on aspect, condition, whether mid-terraced or not and so on.

Interestingly, between 2011 and 2012, these properties were still selling on average at around £110,000, showing good resilience following on from 2008. Fast forwarding to 2015 however, we can see that 2 bed properties in the immediate area are still tending to push the £125,000 stamp duty threshold, and beyond when looking at newly built properties. Certainly, it seems, she could have done reasonably well in terms of capital growth if she had invested in this area.

We then looked at the rents over the ten years since 2005. In 2005 the average rent for 2 beds was £450 per month, a return of around 5.5%. Looking at the average rents for 2 beds in 2010, they had increased a little to between £475 and £500 per month. Now, in 2015, rents again have edged upwards and are upto £525 per month, giving a return of around 5.3% per month, which is steady in light of the capital growth also shown by these properties.

If you would like some advice with your potential investment, please come and see us in our offices.