Thursday, 24 September 2015
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.
Thursday, 17 September 2015
A landlord called me up this week to discuss the affordability of property in Eastwood, with the current regional property market being generally in recovery with increasing house prices. The best advice I can give to those looking to invest in property is one of our secret tricks of the trade. You can judge the affordability of a town by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable property is.
When we put this to the test, we found that Eastwood currently has an average property value of around £142,500 with the average salary being £19,675. This is a respectable ratio of 1 to 7.24. Meanwhile across the motorway in Hucknall, the ratio of property values to salary is 1 to 7.77, which suggests the property in that town is 7% less affordable than in Eastwood.
Both towns compare favourably though to the overall average of Nottinghamshire where the average property value is £157,600 and the average salary is £18,892, giving a ratio of 1 to 8.34.
This means that property generally in Nottinghamshire is a rather significant 13% less affordable than Eastwood, with a ratio of 1 to 8.34.
This could mean that now is a brilliant time to invest in Eastwood’s property market, while the average value of property is low compared to the average salary. If you would like to talk to us about your potential investment, please come into our offices.
Thursday, 10 September 2015
I was talking to one of my landlords the other day, when he explained there were no property bargains for him to buy in Heanor. We don’t sell property and don’t charge for our opinion nor advice, but we can give impartial advice without any conflict of interest to our landlords. Here is what I discovered recently about finding bargains that I had discovered over the last few months.
A 3 bed semi-detached house, with an ensuite to the master bedroom, on Mundy’s estate sold in 2008 for £159,950. This summer, she sold again for £129,000, a drop in value of 19.4%!
Another 3 bed semi-detached house on Kirkstone Avenue sold in 2004 for £130,000, then sold for £116,000 in May this year. This is a near 11% reduction.
Finally, one of those nice modern detached houses, with an ensuite on Brookfield Way was bought for £164,000 and then sold again for £145,000 – some lucky person saving £19,000 or 11.5%.
All this shows that for the discerning property buyer there is always good value to be found.
Whether you are a landlord of ours or not, drop by our offices if you would like any advice.
Thursday, 3 September 2015
A couple of local landlords and I had a discussion about the property market in Heanor, when the subject of risk against returns arose.
All landlords are different in the way they play the property game. 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 playing, it is a good idea to have a game plan.
For a low risk investment, you could buy property in the areas of Heanor which are perceived as being more desirable, such as to the west of the town off the Heanor Road such as the modern properties on Sovereign Way or Sandringham Drive, where you may be able to achieve an annual yield of around 4-6%. Following on from my previous articles, if you don’t mind a slightly higher risk of void periods or a more variable quality of tenant, and you ae prepared to look elsewhere in the town, then you are likely to be rewarded with a higher annual yield of 6-8%. This level of risk can be typically taken with older terraced houses around Heanor. For example we manage many variants on the side streets off the A6007.
If you are after annual yields of over 8%, you could take more of a risk with houses of multiple occupancy or properties in the poorest areas of town which may attract tenants of a low quality.
If you would like any advice on choosing properties, come and see us at our office or email us.