Investing in Stoke on Trent and Newcastle under Lyme buy to
let property is different from investing in the stock market or depositing your
hard-earned cash in the Building Society. When you invest your money in the
Building Society, this is considered by many as the safe option but the returns
you can achieve are awfully low (the best 2-year bond rate from Nationwide is a
whopping 0.75% a year!). Another investment is the Stock Market, which can give
good returns, but unless you are on the phone every day to your Stockbroker,
most people invest in stock market funds, making the investment quite hands off and one always has the feeling of not being
in control.
However, with buy
to let, things can be more hands on. One of the things many landlords like is
the tactile nature of property - the fact that you can touch the bricks and
mortar. It is this factor that attracts many of Stoke on Trent’s landlords –
they are making their own decisions rather than entrusting them to city whizz kids
in Canary Wharf playing roulette with their savings.
I always say
investing in property is a long-term game. When you invest in the property
market, you can earn from your investment in two ways. When a
property increases in value over time, it is known as 'capital growth'. Capital
growth, also known as capital appreciation, has been getting a little better in
recent times in Stoke on Trent, but the value of property does go up as well as
down just like shares do but the initial purchase price rarely decreases. Rental income is what the tenant pays you -
hopefully this will also grow over time. If you
divide the annual rent into the value (or purchase price) of the property, this is your
yield, or annual return. So, over the last 5
years, an average local property has risen by £27,550 (equivalent to £15.10 a
day), taking it to a current average value of £142,800. Yields range from 5% a
year and can reach double digits’ percentages (although to achieve those sorts
of returns, the risks are higher).
However, something I
haven’t spoken of before is the more specialist area of flipping property to
make money. (flipping - buying a
property, carrying out some works and re selling it
quickly). I have seen several investors recently who
have made decent returns from this strategy. For example …
- One Investor paid £110,000 for a 3 bed semi on Tean Road, Cheadle in May 2016. It appears some cosmetic work was done to the property and it was resold a few months ago (December 2016) for £130,000 … 18.18% return before costs (or compound annual return equivalent of 38.07% AER) http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=43808061&sale=89125371&country=england
- Another Newcastle under Lyme Investor flipped a lovely 2 bed bungalow on Rutherford Avenue, Newcastle, paying £135,000 in February 2016 and selling it again after some doing some cosmetic works, sold it for £168,500 a few months ago (November 2016) … 24.81% return before costs (or equivalent 31.19% AER) http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=54759691&sale=89127453&country=england
This demonstrates how the Stoke on Trent and Newcastle under
Lyme property market can provided very strong returns for the average investor.
As my article mentioned a few weeks ago, more and more Stoke
on Trent people may be giving up on owning their own home and are instead
accepting long term renting whilst buy to let lending continues to grow from
strength to strength. If you want to know what (and what would not) make a
decent buy to let property in Stoke on Trent then please feel free to call us
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