I regularly talk to landlords about investing in Ilkeston,
Heanor, Eastwood and Belper. Following a
discussion with one of them last week, he asked me to look into the Cotmanhay
Estate area, and whether it was a good place for him to invest in. There was a 3 bed semi up for auction in mid October
with Guide Price of £76,000. Average rents in these types of properties have
risen by 19.5% since 2008, which is amazing considering average rents in Ilkeston
are in fact 4% lower (on average) than those being achieved in 2008.
Let’s say you buy it for £70,000, the achievable rent will
be in the order of £478 to £500, depending how much effort you have put into
presenting it; but being sensible, we are still looking at a yield in the
region of 8.1% to 8.4% per year ... yields that are only normally achieved in
risky HMO’s (Houses of Multiple Occupation ie Student housing .. with the fun
and games that brings!). Property values since 2002 have risen, according the
Land Registry, in Ilkeston, by 58% but looking at the properties that sold in
2002 and again more recently, average increases in property values on the Cotmanhay
Estate been in the region of 41.5% over the same time frame (not bad for an
ex-Local Authority area where one would think it would be considerably less
than the town’s average).
So is this an investors paradise – great rental growth,
great yield and reasonable capital growth?. Well, all is not as it seems. This is
a great example of the headline numbers (yield and capital growth) being not
the only factor to consider when choosing an investment property, as you should
also consider how long it takes to find a tenant. The average time it takes to
find a tenant in the Cotmanhay Estate area can be up to six to eight weeks,
whereas in most other parts of Ilkeston a tenant is usually found in one or two
weeks. If you take into account the extra five or six weeks of void period for
your property, every six to nine months,
because tenants in areas in such as the Cotmanhay Estate tend to have a high
propensity to move more regularly and the extra fees a landlord has to pay each
time a tenant moves in and out, the annual overall return from the property is
lower than it seems.
We don’t sell property, but we can help you to find the best
investment property with our specialist lettings advice. It is in our interest
that you buy a property which will rent well, and for long periods of time. If
you would like any advice on choosing properties, come and see us at our office
in Heanor or, email me at lettings@sprucetree.co.uk.
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