Thursday, 26 November 2015
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.
Thursday, 19 November 2015
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.
Thursday, 12 November 2015
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.