Tag: rental yield

3rd February 2016

1 Bedroom Maisonette, Pound Hill, Crawley

Two properties for you today !

Both are 1 bedroom maisonettes in Wakeham Greens Drive, Pound Hill. The properties are being marketed by estate agents Mansell McTaggert and Park & Bailey. Coincidently,  both are priced at £150000.

It is quite possible, of course, that these properties are one and the same but being marketed by different agents – we had thought of that ! However, from a close inspection of the fixtures & fittings in the kitchen, it would appear that they are actually two different properties. If you’re not convinced, here are the Rightmove links for a closer look  http://www.rightmove.co.uk/property-for-sale/property-52875145.html  &  http://www.rightmove.co.uk/property-for-sale/property-39646083.html .

Wakeham Greens Dr #3

From the internal pictures the properties look in pretty good decorative order. In the current rental market you would expect to achieve £700pcm  to £750pcm in rent.  Based on an asking price of £150000, this would give you a potential gross yield of 5.6% to 6%. So, not too bad at all. We actually featured a similar property back in October 2015 – this time a 2 bedroom maisonette. The yield calculations gave virtually identical results. If you’re interested, here’s the link https://wordpress.com/post/thecrawleypropertyblog.com/222

Pound Hill is one of the more favoured locations in Crawley. In addition, from our experience, your potential tenant(s) should not have any issues finding places to park their car. These properties are further from Three Bridges mainline station than the likes of flats at Trafalgar Gardens, Maunsell Park, Jacobs Court etc…. However, the distance is definitely “walkable” in our opinion and should not put people off.

Both properties are being offered with no onward chain, so if you want to beat the April stamp duty deadline, you’d better give the agents a call !

If you’ve seen an investment property that catches your eye and would like an independent opinion on its merits for the rental market, give us call before you part with any cash on surveys etc… We’ll give you an honest opinion on what we think the property will let for. We’ll also be able to advise on whether you need to do any improvements, such as decorating, to achieve the maximum from your investment. Don’t hesitate to give us a call on 01293 515588 or send an e-mail to crawley@northwooduk.com.

The opinions expressed in this article are those of the author only and not of 
Northwood. If you are considering investing in property you should seek 
appropriate professional advice.

 

 

 

 

 

 

 

1st February 2016

Crawley v’s Redhill: Investment Property – Not Football !

One of our landlords called up the other day looking to invest in another flat. Flats are his thing rather than houses and he already has investment properties in both Redhill & Crawley. He’d seen a few flats for sale in both towns and was asking our advice as to which location we thought would be better.

This got us thinking about both capital growth & rental yields in both towns. So we decided to take a closer look by comparing roughly similar types of properties in both locations, to see which one was the “best”.

Crawley people will be familiar with the Maidenbower flats at Fenchurch Road, Lyon Close and Dakin Close, while those from Redhill will be familiar with the “St Anne’s” development. Both locations are fairly convenient for their respective town centres and mainline stations to & from London. As such, the flats were and remain very popular with both tenants & landlords alike.

In order to compare the two locations we have used price paid information from HM Land Registry. Historic rental prices, as advertised on Rightmove & Zoopla, were used to calculate rental yields. In Table 1 we show the average prices and capital growth percentages for the flats in Redhill & Crawley over the last 15 years.

Table1: Average prices & capital growth

Table1 1-2-16

* Calculated from Land Registry price paid data

Prices in 2000 were roughly the same for both locations, give or take just under £6k. However, average prices for the Redhill flats have increased by 130% over the last 15 years, giving a year on year average compound rate of increase of around 5.74%. This can be compared with Crawley where there has been a corresponding overall increase of 107%, or an average compound rate of increase of 4.97%, year on year. In monetary terms the average Redhill flats have increased by about £129300 over the last 15 years, whereas an average Crawley flat has “only” managed an increase of £99650 i.e. a difference of nearly £30k !

However, as we’ve previously mentioned before in these blog articles, there are two sides to every story and property investment is no exception. For property investment, the flip side to capital growth is rental yield i.e. how many pounds we get back in rent for each pound we invest. Areas with higher rental yields tend to come with lower capital growth and vice-versa. However, combine both and you get a much fuller picture of how well a particular investment is performing.

The investment strategy of the landlord who prompted this article is fairly well balanced between capital growth on the one hand & rental income on the other. In a perfect world he’s happy to sacrifice some capital growth for rental income, so that his investments cover running costs and provide some additional income on top. His running costs include a float for the inevitable breakdowns & repairs, as well as money for refurbishing his properties every 4 to 6 years to keep them fresh & up to date.

So on the face of it, investing in the Redhill flats is a better option in terms of Capital Growth than Crawley. However, what about Rental Yield ?

In Table 2 we show average gross rental yields over the last 10 years for the Crawley & Redhill flats in question.

Table 2: Average Gross Rental Yields

Table2 1-2-16

The figures in Table 2 show that on average the Redhill flats have a lower average gross rental yield compared with those in Crawley. Over the last 10 years, the difference in yields, shown in the middle column, vary from 9.8% to 16.0%. Another way to interpret this difference is that for every pound you invested in the Crawley flats, you get between 9.8% & 16% more back in rent.

So although the Redhill flats outperform Crawley in terms of Capital Growth, Crawley is clearly the winner when it comes to Rental Yield. Deciding on whether Crawley or Redhill are “best” for you will depend on your investment strategy….. is it driven by income or long term capital growth ?

As far as our landlord is concerned, he’s gone away to think over his investment strategy. His considerations are now whether to change the balance of his portfolio to give higher rental income (i.e. higher yield), sacrifice some of the income for longer term capital growth or stay as he is. We’ll keep you posted on what he decides to do !

If you’re thinking of investing in property in Crawley or surrounding towns, it’s well worth speaking to a property professional who can help point you in the right direction. What & where to buy will depend on your investment strategy, which may be balanced or more skewed towards either capital growth or rental income. We’re more than happy to provide you with free independent advice on any investment purchase you might be contemplating. Just pick up the phone and give us a call on 01293 515588. Alternatively, you can also drop us an e-mail to crawley@northwooduk.com. We look forward to hearing from you.

The opinions expressed in this article are those of the author only and not of 
Northwood. If you are considering investing in property you should seek 
appropriate professional advice.

 

 

23rd January 2016

2 Bedroom Flat, Milton Mount, Pound Hill, Crawley

Presumably this is the view from this 2 bedroom flat, marketed by King & Chasemore at offers over £190000. The property is offered chain free, which will be all important if you are an investor looking to beat the April hike in stamp duty. Here’s the Rightmove link for further details http://www.rightmove.co.uk/property-for-sale/property-39010425.html

18-1-16 Milton Mount

The flats at Milton Mount are built in picturesque grounds of a former country house estate. The flats themselves are fairly spacious compared with their more modern counterparts.

In good condition these flats will rent for £950pcm upwards. For example, we recently let a two bedroom flat here for £995pcm. The rental yield, based on an asking price of £190000, should therefore be between between 6.0% and 6.3%. So not too bad at all !

If you’re looking to invest in Crawley and have your eye on a potential property, why not give us a call on 01293 515588. We’d be more than happy to take a look at the property for you and advise on how you could potentially maximise your investment. Alternatively, drop us an e-mail to crawley@northwooduk.com.

 

21st December 2015

2 bedroom apartment, Pound Hill, Crawley

I spy with my little eye…..a 2 bedroom apartment that has just come on with estate agents Greenaway. The Guide price is £210000, although they also give a price range of up to £230000. A major bonus for a property like this is its proximity to Three Bridges mainline station with fast trains to and from London.  Here’s the Rightmove link for further details http://www.rightmove.co.uk/property-for-sale/property-36504540.html

Trafalgard Gdns 21-12-15

As we saw in our last blog post, the agent has used rather summery looking pictures of the outside of the development, which may be indicative of  some prior marketing activity. In fact, checking back at the marketing history it appears that this flat was up for sale with the same agents back in September.

According to the agents’ description, the apartment is currently tenanted with the tenants contract due to expire in February 2016. As the property is not being specifically marketed for “Investors Only”, we can only assume that the vendor will sell to a fellow investor or someone looking to make the property their home.

Looking at the description, there are a couple of key features to consider from an investment point of view. Firstly, the flat is on the ground floor, which can be considered by some as more of a security risk. Personally, I wouldn’t let this put you off. To its advantage the apartment has its own (small) patio area and of course, no stairs to climb with bags of heavy shopping after a trip to the supermarket.

For the second feature, take a look at the bathroom in the property details. What do you see, or should I say, what do you not see ? If you’re unsure, think about the property and how it should appeal to the widest possible range of potential tenants. This will ensure minimum void periods and maximum rent. By way of a clue, check out one of our previous blogs e.g. 14th September 2015 at https://wordpress.com/post/thecrawleypropertyblog.com/13   If you’re still unsure, I’ll provide the answer for you tomorrow.

What about the potential yield ?

Properties like this one currently let for between £975pcm and £1000pcm. So in terms of yield you are looking at a range from 5.1% to 5.7%. We’ve calculated this range based on the “worst case” scenario in which the flat is purchased for £230000 and lets for £975pcm. The upper range or “best case” occurs where you buy the flat at £210000, but manage to let it for £1000pcm. Yields for both “worst” and “best” cases are certainly very respectable, but you should of course try to secure a property like this for as low a price as you can.

If you’re looking to invest in Crawley or surrounding towns why not give us a call to discuss what options are open to you. Our advice is free and, due to our years of lettings experience, we can provide you with many valuable insights. Call us on 01293 515588 or alternatively drop us an e-mail on crawley@northwooduk.com.

NB Don’t forget, we’ll give you the answer to our question tomorrow.

 

 

18th December 2015

1 bedroom flat, Copeland House, Rathlin Road, Broadfield, Crawley

Here’s a charming looking 1 bedroom flat in Copeland House, Broadfield, Crawley that has just come on to the market. It’s on with estate agents Zoom995 at £169995.

The warm sunshine in the picture, however, gives the game away a bit. A little further digging indicates that the property actually first came on to the market back in September …. which indicates the vendor hasn’t been able to sell at this price ! Well, not to worry, we’ll store that piece of information away and use it later  …. here’s the Rightmove link for further details http://www.rightmove.co.uk/property-for-sale/property-36615825.html

Rathlin Rd 17-12-15

You’ll see from the internal photos that the property appears to be presented in very good condition, which is all to the good.

1 bed flats in Copeland House are renting for between £750pcm and £800pcm. In fact there’s one available now for £875pcm …… which may be just a little too high. It’s still on the market To Let and has been since the end of November. Only time will tell if they achieve this price.

If we look at the rental yield for this flat based on the rents that have been achieved i.e. £750pcm & £8000pcm, we get a range from 5.3% to 5.6%. So, not too bad at all.

Of course, using our “inside” knowledge regarding the actual marketing date of the property, you should have a better than evens chance of negotiating the price down a bit. As we always say, if you don’t ask, you don’t get !

If you’re looking for investment properties in and around the Crawley area, why not give us a call on 01293 515588. We’re more than happy to give you advice & will even view properties on your behalf before you buy. Please note, we don’t charge for this service either ! That way you get an independent, unbiased opinion of a property’s investment potential. Always remember that the selling agent in any property deal acts for the vendor, not the purchaser ! Alternatively, you can e-mail us at crawley@northwooduk.com.

 

 

17th December 2015

Price Reduction: 2 bedroom flat, Furnace Green, Crawley

You may recall back in November we published a blog featuring a 2 bedroom flat in Furnace Green, Crawley. Here’s the link https://thecrawleypropertyblog.com/2015/11/23/23rd-november-2015/

According to the selling agents (Astons) the property, which was being marketed to investors, was let for £875pcm. Back in November the asking price was £169950.

Well, the same property (with the same summery photo !) has just been relaunched with a £4k price reduction at £165950. Here’s the Rightmove link in case you want a closer look http://www.rightmove.co.uk/property-for-sale/property-52224724.html

Furnace Green 23-11-15

Based on the new asking price & quoted monthly rent, the potential rental yield has notched up a couple of tenths from just over a 6.1% in November to 6.3% as of now. Readers of this blog will know that a yield of this size  is  pretty healthy for the Crawley buy-to-let market. However, as we’ve said before, where the rental yield is high, capital growth is often lower.

One question that you might be asking yourself is whether, after a £4k price reduction, the flat is now reasonably priced. The second question, of course, is whether the vendor would be prepared to accept an even lower offer.  To answer the second question first, just ask. The worst that the vendor can say is no !

There are a couple of pieces of information that might help us decide whether the flat is now reasonably priced.

Consider, for example, the sold price history for this particular flat which is shown on the Rightmove details. At the peak of the market in 2007 the flat sold for £150000. Our previous analysis of sold prices for flats in Crawley over the last 15 years (see our blog post of 6th November) indicates that prices have only increased by a relatively small amount (approx 6% ) from the 2007 peak. If we were to assume that the flat under consideration here had increased in value by 6% since it was last sold in 2007, it should now be worth about £159000.

Another point to consider is that the property is currently being marketed to “investors only” and probably means that the  vendor would ideally like to sell the flat with the tenant in-situ. This type of sale can be advantageous for both purchaser and seller alike. From the purchasers point of view he gets a tenant from day one. As far as the seller is concerned, however, he should in theory be paid rent up to the day the sale completes. This is of course infinitely better than having to pay a mortgage on an empty flat while the sale (hopefully) goes through! In addition, with the imminent 3% increase in stamp duty for buy-to-let property purchases due to come into effect in April 2016, a vendor in this position would presumably rather sell sooner than later.

Thus armed with your analysis and understanding of the property market in Crawley you can make a more informed decision about whether to buy the property and what price you should be paying.

Whether you’re an experienced property investor or a buy-to-let novice, you can always give us a call for free advice on what the property market in Crawley has to offer. Call us on 01293 515588 or e-mail us on crawley@northwooduk.com.

7th December 2015

3 Bedroom House, Tilgate, Crawley

Here’s a 3 bedroom house on Ashdown Drive, Tilgate, Crawley that has just come on to market with a guide price range of £260000 to £290000. Moore & Partners are the estate agents and there’s an Open Day on 12th December. So give them call if you’re interested. For a closer look now, however, here’s the Rightmove link http://www.rightmove.co.uk/property-for-sale/property-56472209.html

Ashdown Dr 7-12-15

The agents (Moore & Partners) indicate that the property could do with some updating. We’d agree with this, although from the pictures the house is presented in a neat and tidy condition. However, the green bathroom suite is a bit of a giveaway ! Of course, with your investors hat on, one key element you would need to have in the bathroom would be a shower over the bath. From the pictures and description, this appears to be missing. If you don’t change the bathroom suite (for a white one !), the minimum we would recommend is to make sure that there is a shower over the bath.

Please also check that the property has double glazing through out. It is mentioned in the description a couple of times, but in relation to specific windows & doors only.  A quick call to the agent will remove any doubts.

If you were interested in the property with a view to updating it, one question to ask yourself is how much is reasonable to spend on the remedial works ? Of course, there are no “hard & fast” rules in answering this question. However, we looked at a similar scenario in our previous blog of the 19th October 2015 and the analysis there can also be applied here. Here’s the link to the blog in case you want to take a look https://wordpress.com/post/thecrawleypropertyblog.com/274

In reality, any renovation project should be concerned with making sure that what you plan on doing is “reasonable” and “fits in” with similar properties in the area. To that end, similar properties in the Tilgate area that have already been updated are being marketed for sale in the £280000 to £300000 price range.  One property is up for sale at £295000, with a tenant in-situ. In terms of rental returns, however, properties like the one we are considering here currently rent out for between £1150pcm to £1200pcm.

If you consider a 5% rental yield as a benchmark return on your investment, these rents translate into prices ranging from £276000 to £288000 with an average of about £282000. Hence, spending £15000 to £20000 on top of a purchase price of £260000 to renovate the property would, in our opinion, not seem too excessive. Of course, the assumption is that the money is spent wisely and not, for example, on gold-plated taps ! One item that the selling agent hints at is the potential for off road parking (subject to planning consent). In our opinion, this would be something well worth considering if updating the property.

If you have your eye on a renovation project, be it to do up and sell or rent out, don’t hesitate to give us a call. We’d be more than happy to give you our opinion as to what would be reasonable to spend your hard earned cash on. Call us on 01293 515588 or e-mail us on crawley@northwooduk.com.

30th November 2015

Bargain or not ?

Take a look at this 1 bedroom flat at Connaught Gardens, West Green, Crawley, on the market with Astons at £167950. The property is marked for “Investors Only”, which probably means that there’s a tenant in-situ. However, no rent is quoted and there are no internal photographs.

Connaught 30-11-15

For further details, here’s the Rightmove link http://www.rightmove.co.uk/property-for-sale/property-52224760.html

One thing to notice straight away is that the picture looks quite “summery”, rather than indicative of the end of November!  A little further digging and we found an identical photograph, advertising (presumably) the same property, from July 2015 at a lower price of £164950. Here’s the Rightmove link https://www.rightmove.co.uk/rmplus/property/showPropertyMcr.action?propertyId=35578086 You’ll also notice that there is a “Sold STC” flash on this picture. So presumably, an offer was accepted by the vendor, but for one reason or another the sale did not go through to completion.

If the property didn’t sell at £164950, why market it now for £3000 more?

Well, perhaps the agent could argue that the market has now “moved-on” a bit since July and the vendor, fed up with waiting for another sale, has also decided to let the property out. Hence it is now being marketed for “Investors Only”.

Of course, the above is just speculation on our part you understand, but these things do happen.

One bedroom flats like the one we’re considering rent for between £775pcm & £795pcm. So based on a marketing price of £167950, the rental yield would be in the region of 5.5% to 5.7%. Regular readers of our blog will know that a rental yield at this level is pretty good.

However, let’s take a closer look at the asking price.

Land Registry price paid information for properties can easily be found from sites such as Rightmove or Zoopla. Looking at the price paid information for Connaught Gardens, Crawley, on Rightmove, you’ll see that a similar one bedroom flat sold for £155000 (June 2015) and a 2 bedroom flat completed in April 2015 for £167500.

So the question remains, is the 1 bedroom flat we’re considering a bargain at £167950 or not?

Well, from the marketing price history of the flat, together with recent sold price information for other properties in the same development, £167950 does seem to be a bit on the high side. This is inspite of the fact that the   rental yield appears to stack up. So armed with the results of our investigation, you could sensibly approach the agent with a below asking price offer and argue quite a convincing case for it to be accepted.

Of course, it remains to be seen whether the vendor would be persuaded! However, your most powerful weapon in any negotiation is that you can make a “sensible” offer and then walk away. This will leave any decisions to be taken, firmly in the vendors hands. And remember, don’t get “hooked” up on any one particular property, there are others around to consider.

If you currently have your eye on a buy-to-let property in and around the Crawley area, but are not sure whether you’re paying too much for it, why not give us a call on 01283 515588. We would be more than happy to offer you our advice. Alternatively, you can also e-mail us on crawley@northwooduk.com.

 

27th November 2015

1 bedroom flat, Manor Royal, Crawley

Those of you with your ear to the ground or a finger in the air (to check wind direction !) , will have noticed how some office blocks in Crawley town centre are being converted into residential dwellings. Relaxation of the planning laws essentially means that provided the developer does not alter the outside of an office block, they can obtain “prior approval” to change its use.

The first office block to undergo this transformation in Crawley was First Choice House in Manor Royal, as reported last May in the Crawley News http://www.crawleynews.co.uk/successful-request-turn-offices-flats-Manor-Royal/story-21090362-detail/story.html

So, here’s a 1 bedroom flat for sale in First Choice House, Crawley. The property already has tenants paying rent of £850pcm, according to the marketing agent, Astons. The property is on the market for offers in excess of £180000.

For further details, here’s the Rightmove link http://www.rightmove.co.uk/property-for-sale/property-52230799.html

First Choice Hse 27-11-15

Clearly the vendor would like as much “in excess” of the purchase price as they can get ! However, bearing in mind that we are in a traditonally slow part of the year, with the the run-up to Christmas and IF you are an investor who can move quickly, do use your bargaining power.

If you can get the property for around the £180000 mark, with a rent of £850pcm, your potential gross yield would be just over 5.6%. So, pretty good. However, do check the tenant’s rent payment history and how well they’re looking after the property well.

Should you be an experienced investor, or new to the buy-to-let market,  do give us a call on 01293 515588. We’d love to discuss the different property investment opportunities that Crawley has to offer. Alternatively, you can also e-mail us on crawley@northwooduk.com.

 

 

 

 

23rd November 2015

2 bedroom flat, Furnace Green, Crawley

Marketed by Astons to “investors only” is this 2 bedroom flat in Furnace Green, Crawley on the market for £169950. The agents state that the property is currently tenanted and that the rent being achieved is £875pcm. Here’s the Rightmove link for further details http://www.rightmove.co.uk/property-for-sale/property-52224724.html

Furnace Green 23-11-15.jpg

As we’ve said before, if you plan to buy with tenants in-situ, do check their rent payment history. In addition, to avoid disrupting the tenants and to save yourself a few pounds, you might be able to get the white goods “thrown-in” with the purchase price. After all, it is unlikely that the current owner/landlord will have anywhere to put them ! Lastly, for the purpose of due diligence, always enquire as to why the owner is selling.

What about the rental yield ?

We’ve checked comparable properties in the area and the quoted rent of £875pcm seems spot on. So based on the purchase price of £169950, you would expect to get a return of close to 6.2%. So not too bad at all.

Whether you’re an experienced investor or considering buying an investment property for the first time, we’d be more that happy to have a chat with you. Should you see a potential investment property through another agent, we could also view it and give you an independent opinion on its suitability – before you part with any money on surveys or solicitors fees. We don’t charge for this service, so just give us a call on 01293 515588. Alternatively, you can also e-mail us at crawley@northwooduk.com.