Well the blog is now into its 6th week now and we have had over 40 posts. Thank you again for all the kind emails and comments about the blog and I know many of you are starting to consider to put into practice what I preach, whilst others have asked me if I could do all the blogging, article writing, twittering, social media malarkey for them.
I keep banging on about stories and talking about the local market, being interesting to your potential landlords but haven't really shown some real stories in the flesh. Therefore, I have below, a trio of stories that were released on a weekly basis .. remember, these would go in the newspaper, on blogs, Tweeted, dropped into facebook, dropped into newsletters and emailed / hand delivered to existing and potential landlords. This is the sort of detail you need to go into to get landlords attention..... and as a final note, I have never ever been to East Grinstead .. I dont need to know a town to write these sort of articles with this amount of detail ....
Before we start ,,,,Please note I have changed some of the towns / locations in the stories to protect the innocent
Week 1 ....
Week 1 ....
Buy to let - is East Grimstead good place to buy?
I have recently been speaking with a number
of landlords about the importance of a balanced portfolio, when buying and
renting out property. The balance between buying properties that offer good
monthly returns (high yields) but quite often offer poor capital growth (ie
they don't increase in value that much over the years compared with the
average) verses properties that do go up in value quicker but often offer a
lower yield. Another consideration has to be the mix of town properties verses
the villages.
Choosing the right village though is very
important. Living in villages often has higher costs, especially transport and
petrol costs. Some tenants don't buy because they can't afford the mortgage, so
if you buy in the wrong village, you could limit yourself to the type of tenant
who can afford those extra transport
costs.
However, one town that has a
high demand with tenants is East Grimstead. Particularly popular with staff
from Gatwick airport and people from the
nearby RAF Madeupname. With two churches, three pubs, two shops, a village hall, East
Grimstead offers a peaceful environment matched to an active and varied social
scene. The village
consists of some 800 dwellings of different housing types and a population of
nearly 2000 people.
Rental prices range at the lower end from around £650 per
month for a small terraced cottage, although we recently let a lovely 1
bed annexe / maisonette in the village,
which literally went in hours at £600 per month. For the mid £700's , a larger
3 bed semi can be rented whilst a £1000 per month will get you a large 4 bed
detached house. All very reasonable rents, which means with the the RAF base
and Gatwick airport on the door step, there is always demand for properties in
the village.
So, does
that mean you should buy a property in East Grimstead as a buy to let investment? Before I can
answer that, you must really consider the capital growth vs yield question.
Some Haywards Heath and Horsham buy to let investors often make the mistake of
chasing yield over capital growth. Some investors believe that by chasing high
yielding properties, in say the poorer parts of Horsham, they will make a
faster profit than waiting for capital growth. The problem with this is that to
achieve high yield you usually have to compromise on capital growth.
Therefore it
would seem the most logical solution is to find a high yielding property in a
strong capital growth area but, these simply don't exist and in actual fact, most of the time, lower
yielding properties have a better capital growth. This is because there is generally an
contrary relationship between yield and capital growth so the higher the yield,
the lower the capital growth and the higher the capital growth, the lower the
yield. Property investment in Haywards Heath and Horsham is about balancing the
two.
Not many
landlords, especially those who use buy to let mortgages, can afford to service
high levels of debt without a reasonable yield , which forces them to look at
ways of making an investment affordable by finding the right balance between
capital gain and yield.
Yield is
critical to the survival of an buy to investment but it’s not the key to
building wealth. Don’t chase yield for yield’s sake, but rather chase capital growth
with enough yield to make it serviceable because in the long term it is the capital growth, not
the yield that will generate you the
wealth and the financial independence you are seeking.
Next week, I
will show that East Grimstead could just offer that right balance of yield and
capital growth.
Week 2 ....
East Grimstead property market - Good
Capital Growth?
For those that read last week's article, I promised that
I would look at the East Grimstead property market and compare its Rental yield
and capital growth for the buy to let investor.. For those new to the buy to
let investment game, the yield is the yearly
rent from a property reflected as a percentage of the value of the property
(one might consider it in the same light as the interest rate from your savings
account) whilst the 'Capital growth' is the amount the property goes up in
value each year reflected as a percentage of the value of the property.
The average value of a property
before the crash of 2007 in East Grimstead was around £301,000. The year after,
in the 2008 slump, prices dropped in the village to £279,000. Considering
values today in the village are around £312,000, if you bought in East
Grimstead in 2008, values would have increased by just over 11%. When you
consider values in Horsham since the 2008 slump are only 4.5% higher and in Gatwick
6.2% higher, this is an excellent
increase.
According to my records, three
properties sold in the village in July. A very nice modern extended 4 bed semi
on Wheelwright Close, which came onto the market in 2012 at £250,000, sold for
£225,000 this February. Also, a small 2 bed detached house on Woodmer Close in
the village, sold in March for £210,000. Of the 800 properties in the village,
an impressive 95 have changed hands in the last five years, so properties
certainly come up for sale and they most certainly sell.
However, property investment
cannot be judged over short time frames and most certainly not by averages. I
often, when looking at a market for a landlord, like to take a longer look at
the market, and consider 10 to 15 years a more suitable time frame for capital
growth. After doing my research, a very nice stone terraced cottage, sold on
Church Street for £55,000 in June 2000. It sold again this year for £125,000.
Now the average property value increase for Haywards Heath and the immediate
villages, in that time frame was 77.6% whilst property saw capital growth of
nearer 127%. Put the same £55,000 in the stock market in 2000, and in 2013, it
would have risen to £55,880, a not so impressive rise of only 1.6%.
That's not to say everything
in East Grimstead turns to gold. There are good properties, that have dropped
in value. A very pretty 3 bed semi detached cottage sold in 2005 for £325,000.
If it has followed the Haywards Heath averages, it should have sold for
£351,000. However, some lucky person purchased
it for £310,000.
As we don't sell property, I
can always give my landlords and landlords who aren't with me but want a second
opinion and even people who are thinking of becoming landlords, my unbiased
opinion on what to buy and not buy. I pride myself by knowing the market intimately,
so I can give some great advice and opinion. It might not be what you want to
hear but, I can assure you, it is what you need to hear. If you want to chat
about property investment in the area, be it Haywards Heath, Horsham, or any
village, including East Grimstead, then if you buy right, you will build
yourself some capital growth for the future. My offices on are High Street in Haywards
Heath and I look forward to seeing you soon.
Week 3 ....
East Grimstead property market - Good
Yields?
Following last week's
discussion about how property values (aka Capital growth) had gone up in East
Grimstead, this week I want to discuss the other side of property investment,
the yield. If you recall, the yield is the yearly rent from a property reflected
as a percentage of the value of the property. Another way of saying what is its
annual interest rate, but its not interest that pays you back, it is the rent
that is your income.
So what sort of yields can be achieved
in East Grimstead? Starting at the lower of the market, small terraced
cottages, depending on accommodation can range in price between £125,000 and
£150,000, whilst the rents achieved are in the early £600's to the mid £600's
per month, giving yields in the 5.5% to 5.7% region. Considering values in the
whole village have gone up by nearly 2% this year, that's an overall return of
7.7% in the last 12 months.
Modern 3 bed town houses can
be bought for around £190,000 on Wheelwrights Close and they achieve rents in
the £700 to £750 per month region. This gives a yield of 4.5% and with values
increasing by nearly 2%, that gives us 6.5% return. So surely the smaller
property would be better? Well other factors must also be taken into account
when buying a property to rent out. The more modern property will require less
maintenance, and will always sell quicker (because there will be a time when you do need to sell it) and
finally, will have slightly less void periods than a smaller property.
Balancing capital growth and yield is vital, but they are not the only factors
to consider when buying a property to invest in.
The reality is, buying a buy to let property, be it in
Haywards Heath, Horsham or the villages, is a vastly different affair to buying
a property for yourself to live in. When you buy a home for yourself, you look
for a property with the accommodation you need, in an area that you want to
live in, within your budget. When buying a home, the only opinion that matters
about its features, location or accommodation is your own. For a buy to let
property, the equation is exactly the opposite. Buy to let investment is about
finding a property in high demand and short supply that will go up in value
substantially over time.
The only views that matter when assessing an
investment property’s potential, features, location or accommodation is that of
the market place, both now and in the future. It’s this balance of market
opinion and underlying demand which ultimately determines its investment
performance, both in terms of income and capital growth. I tell landlords to never
allow their own personal likes and dislikes to cloud their rational investment
judgement. Remember, rule No.1 of property investment .. you aren't going to
live there.
If you want to chat about
property investment in the area, be it Haywards Heath, Horsham, or any village,
including East Grimstead, please pop in
to my offices on High Street in Haywards Heath.
So, to conclude, to get the landlords attention and interest, you have to become the local property market guru. None of this 'how to evict a tenant rubbish', no 'Section 8 or Section 21 - whats the best?' stuff, that's what they pay you to decide and definitely no Top Ten Tips for Landlords. I understand that is what you might think people want to read, truly I do understand .. but how would you like it if your garage emailed you every month with the changes in the MOT rules (its therefore just as bad to talk about s.13 notices .. isnt it?)
Write stuff like this, week in, week out and within months you will get a trickle then surge then a flood of landlords to your door. I offer a mentoring service to teach letting agents how to write these sort of articles or you can ask me to write similar articles for you.
Shalom
... and I couldnt resist the doggie photo!
Write stuff like this, week in, week out and within months you will get a trickle then surge then a flood of landlords to your door. I offer a mentoring service to teach letting agents how to write these sort of articles or you can ask me to write similar articles for you.
Shalom
... and I couldnt resist the doggie photo!