Do the numbers ever lie?

I was asked about these 2 properties below by a landlord and she wanted to know if either would make a good investment. For obvious reasons she is keen to purchase below the £250k threshold to save £5 in stamp duty and is quite flexible about the type of tenants. So I thought I would do some investigation into the figures.

property 1 - Courtesy of sale agent Bourne
http://www.rightmove.co.uk/property-for-sale/property-28541232.html


It is a 3 bedroom end of terrace in Rowan Close, Bellfields. Over the last 5 years 12 out of the 88 properties on this road have sold, at an average of £189,916.
It is advertised at £250k, it looks like it needs some redecoration so one would have to budget for that in cost and void time after purchase, so offer £240k. Assuming the integrity of the building is fine and one does due diligence on the boiler and electrics, I think one needs to budget £5k-£10k for work plus 2 months void period after purchase (1month might be feasible but best to budget for 2). This would then let to a family for c£1150pcm with a yield of 5.52%. Alternatively, the floorplan shows it could be let furnished to students / sharers or even on a room by room basis and £1400 could be achieved= 6.72% yield!
The biggest factor to consider on this property is location as it is Bellfields and is about 1.5 miles from the station and town centre, long term this could mean more void periods. However, capital growth needs to be considered too and  Rowan Close has seen an increase of 15.48% over the last 5 years.
Below is a well presented 2 Bedroom flat in Onslow Village, just under 1 mile from the station. It is in a block of flats called Wilderness Ct on Wilderness Rd. This block has seen only 6 of the 35 flats change ownership in the last 5 years at an average price of £174,083. Capital growth in the block has been 14.03% over the last 5 years , so slightly behind Rowan Close. The flat would also rent our for c£1000pcm yielding just 4.8%.

property 2 - courtesy of sales agent G-Pees
http://www.rightmove.co.uk/property-for-sale/property-28610061.html



So, the figures suggest 2 things on the face of it
1- Rowan Close is a good investment
2- Perhaps Wilderness Court is overpriced, although there are similar flats in the town at that price.

I would conclude that Wilderness Court is not for an investor as one would also have ground rent and service charges on the leasehold.
However, I would also be nervous to recommend Rowan Close even though the numbers look good- because of the location,  unless of course you were prepared to put the work in and let it on a room by room basis to transient tenants.

There is so much to consider when investing, sometimes not just the numbers.

If you want free, no obligation advice of purchasing an investment property in Guildford or the surrounding areas or just want to talk property with us, please call on 01483 537200 or drop in for a coffee to our shop on Woodbridge Rd.

Facts about the Property Market in Fairlands, Guildford

A Landlord who invests in rental properties through out Guildford asked me about her home area of Fairlands along the Aldershot Rd.
What we found out was quite interesting. The average property value in Fairlands is £343,872, with the most expensive road in the estate being Fairlands Rd itself which also has the highest value property that has sold in the last 5 years, this being 43 Fairlands Rd that sold for £490k in July 2010.
The residents of Louis Field have been the busiest selling, with  22.9% of the properties on this road changing ownership in the last 5 years.
The average rent in Fairlands is c£1450pcm.
If you would like to come and discuss property in Guildford and the surrounding areas then feel free to call me on 01483 537200 or drop into our office on Woodbridge Rd, Guildford.

Ladygrove Drive outperforms Town Centre's York Rd

I had a customer that is looking to buy their first buy-to-let property in Guildford and they asked if a 1 bed flat in Burpham was a better investment than buying a similar flat close to the town centre and station.
Long standing theories suggest purchasing close to a town centre and railway station are a must for any investor but I thought I would look at the hard facts and numbers and see if this remained true for the Weylea estate.
If one looks at 1 bed flats / masionettes on Ladygrove Drive, the current average sale value is £187k. These would rent out for £800pcm providing a return of 5.1%. Comparing this to "tenant's alley", York Rd where average sale values are £203k with rents at a similar £800pcm, the yield of 4.7% is less in the town centre.
However, taking into account capital growth over the last 5 years, Ladygrove has seen 11.59% increase, equal to £20k compared to 15.49% on York Rd which equates to over £27k. This extra £7k amounts to over £115 per month extra growth on York Rd to Ladygrove Drive.
If you would like any advice on renting out or purchasing a property in Guildford or the surrounding areas please feel free to call me us on 01483 537200

Godalming or Guildford?

A long standing landlord of ours came into the office earlier this week as they are thinking of buying another property as an investment. They asked if Godalming was perhaps a better area to buy a 1 bed property in than Guildford, GU1.
This got me thinking as usually I would recommend GU1, but I decided to do some more research.
In GU7 there is certainly a higher percentage of home owner occupiers, in fact 71% vs only 65% for GU1 and 66% nationally.
The average value of a 1 Bed property in GU7 is £202,000 with an expected rent of £800 pcm giving a yield of 4.75. Whilst in GU1 the average value is £209,800 with rents of £875 yielding 5%.
However, further research shows that over the last 2 years prices have grown by a very healthy 9.84% in GU1, but GU7 has shown even better results with 11.04% growth.
If you are thinking of investing in property in the Guildford area please feel free to speak to us on 01483 537200 or drop into our office on Woodbridge Rd, Guildford. We can discuss your objectives and help you make an informed decision.

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What strategy works for you?

                                                         
A long standing landlord of ours and I had a discussion about the property market in Guildford, when the subject of risk against returns arose.

All investors 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 easily 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. Everyone wants their cake and eat it, chasing high yields and exceptional capital growth above the market average with a superb tenant, but it is wiser to prioritise one of these in line with your long term objectives.

For a low risk investment, you could buy property in the areas of Guildford which are perceived as being more desirable, such as along Epsom Rd or in the town centre , where you may be able to achieve an annual yield of around 4.5-5.5% with quality professional or corporate tenants.
If you don’t mind a more varied quality of tenant, such as students or professional sharers, you are likely to be rewarded with a higher annual yield of 6-7%. This level of risk can be typically taken with properties in North Guildford.

If you are after annual yields of 8%, you could take more of a risk with  houses of multiple occupancy or letting on a room by room basis with properties in Bellfields or Park Barn which may attract tenants of a more transitional nature and create more work.

If you would like any advice on choosing properties, come and see us at our office on Woodbirdge Rd or email guildford@belvoirlettings.com