Many investors have felt the pinch recently regards their buy to let investments.
In fact, if you aren’t on a tracker mortgage you could be severely stretched.
Now here is the interesting bit….
Did you know the average amount a student will pay per week is £66.48?
Areas and their average rent per week.
City Average Rent Per Week (£) Index*
London – 102.85
Middlesex – 83.97
Cambridge – 82.98
Guildford – 82.37
Surrey – 81.15
Exeter – 77.54
Chester – 77.12
Chichester – 75.00
Oxford – 74.71
Brighton – 73.71
Kent – 72.24
Bournemouth – 71.11
Bristol – 70.84
Warwick – 70.75
Eastbourne – 70.67
Durham – 68.95
Reading – 68.89
Loughborough – 68.81
Hatfield – 68.35
Doncaster – 68.04
Colchester – 66.67
Portsmouth – 66.49
Plymouth – 65.26
Falmouth – 64.76
It makes interesting reading doesn’t it?
The thing to do is look at what you can pick up a typical 4 bedroom house for in these areas.
Now of course some of these areas are fairly affluent so finding the right property at a good price may be harder than you think.
Take a look at the prices you can pick 4 bed houses up in the following locations!
1. Exeter – 77.54 – Price for a 4 bed house £150,000, Yield = 10.75%
2. Chester – 77.12 – Price for a 4 bed house £145,000, Yield = 11.06%
3. Eastbourne – 70.67 – Price for a 4 bed house £160,000, Yield = 9.18%
4. Doncaster – 68.04 – Price for a 4 bed house £100,000, Yield = 14.15%
5. Colchester – 66.67 – Price for a 4 bed house £120,000, Yield = 11.55%
6. Durham – 68.95 – Price for a 4 bed house £110,000, Yield = 13.03%
So yields of between 9% and 13% are possible in some locations.
Demand:
So your traditional b-t-l is up against 30 other investors all who are struggling to let their property out, you thought you bought in a regeneration area but unfortunately due to the economy it hasn’t quite worked out how you wanted it to.
Sound familiar?
Did you know some of the universities in the areas above literally turn away hundreds of students every year because there is nowhere for them to live.
In fact, my local university in Chichester turned away 280 students last year and has talked about leasing property off of major builders in an effort to keep up with demand!
Problems:
Every buy to let investor who has been in the market for more than 5 minutes has probably looked at HMO property, normally they are put off by the various restrictions and the fact that the management of the properties is that much more difficult than a traditional b-t-l.
I don’t think it has to be, by buying smart and doing a bit of work up front you can marginalize a lot of the risk involved.
Also, put a management company in charge, there are good ones available that will look after all aspects for you, they aren’t cheap but they do make your job a lot easier.
Conclusions:
It won’t be for everybody but it’s definitely worth considering and a lot of hmo investors tell me that once you understand the various regulations, it actually provides a great rental income! You can also sleep a lot sounder knowing that your various properties will ALWAYS be in demand!
At Fresh Invest we will provide a sourcing and thorough vetting service to find you the best property for your needs.
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