Why should you consider buying to let in Derby?

In last weeks article, we spoke about the difference between Derby and Nottingham property markets. Now this resulted in a number emails arriving into my inbox as well as a few people popping into my offices for a chat about investing in buy to let.

Many people in our part of Derbyshire, over the last few years, have seen the buy to let market become all about nest egg investment. It is fuelled by pitiful interest rates on building society savings and reflects the fact that building society savings accounts are paying half a per cent interest and pension returns are struggling to match expectations, turning more and more people into landlords to secure their future.

So what can you expect from your rental property investment? In the short term, rental yields are important, and in Derby, the average annual yield is in the order of 3.44% per year. However, that is based on averages, and as most landlords in Derby tend to buy starter home homes, apartments and terraced houses, the majority of which are achieving 4.5% to 6.2% per year depending on location and price in the City.

In the long term though, the question of capital growth is as important, if not more important (because if you have great short term yields, but the value of the property doesn't keep up with the rest of the market, you will have an asset that in real terms is dropping). As we mentioned in a previous article, average property values in Derby currently stand at £170,300. Property values in Derby have risen by 9.65% in the last 5 years. On the other hand, property investment is a long term game, so I wanted to share with you the research I did for a couple of Derby landlords.

Roll the clock back 10 years to 2004 when the average value of a property in Derby was £146,100. 15 years back to 1999 makes really interesting reading, as the average Derby    property value was only £65,600, 30 years makes it £28,200 and just for a bit of fun, we looked at 1974 at it was £10,050!

However, if one looks at say a 30 year investment period, if you had put your £28,200 into the stock market in 1984 instead of buying a house in Derby, your shares today would be worth £134,690. Put the same£28,200 money in a Building Society account and you reinvested the interest back into the account, and your Building Society passbook would have £158,070. Compare that with the property market in Derby and the property would be worth £170,300 today.

Not much difference to the building society until you realise that with the rental property you would have received in excess of £108,000 in rent over those 30 years, which wouldn’t have received with the Building Society account!

If you would like to arrange a FREE RENTAL VALUATION then click HERE.
If you would like to see our selection of Investment Properties for Sale, then click HERE.

Call me at our office on: 01332 366171 or visit the website: www.pplets.co.uk

Derby vs Nottingham... property values, not football!

One topic that I am always asked about, both by existing landlords and new ones, is how one city’s property values have performed against another. When purchasing a buy to let property, there are two ways landlords make money through property letting; capital growth and rental income growth.
When a property increases in value over time, it is known as capital growth. Capital growth has been strong in recent times in both Nottingham and Derby, but the value of property does go up as well as down, and of course the local conditions surrounding your property have a big effect. Rental income is what the tenant pays you and, hopefully, this will grow over time too. If you divide the annual rent into the value (or purchase price) of the property, this is your annual return.

I was attending the Graham Penny Auction in Nottingham a couple of weeks ago and a landlord from Breaston, who has a number of properties in both Derby and Nottingham, asked me about the difference between Derby and Nottingham housing markets. I was quite surprised with my findings and wanted to share them with you.

The average property price in Derby is currently £170,300. In the last 3 months property values in Derby, according to my calculations, have risen by just over 2.6%  which starts to claw back the losses we experienced in the latter half of 2012 when values dipped by nearly 1.75%. That sounds a lot, but roll the clock back a few years and in 2011 values dropped 5.6% from the property values being achieved the year before. However, irrespective of the roller coaster prices we have seen in the City, they are still 9.65% higher than the 2009 slump (before you get the party hats on, we still have 8% to go before we reach the 2007 peak!).
Nottingham, has a slightly different story. Whilst in Derby, prices would need to rise by 8% to take average values back to the 2007 peak, Nottingham property values are only 6.5% away from those 2007 peak prices. In 2007, the average property price in Nottingham £174,200 and today it is a respectable £162,800. Therefore, is Nottingham the better bet?

Well, not necessarily. Over the last 2 years, property values have increased at a 56% quicker rate than Nottingham’s. If this trend carries on, Derby might overtake Nottingham in 18 months, in relation to long term house price growth. But then there is question of yield, as  Nottingham normally has higher yields than Derby, but Nottingham’s rental market can be quite fraught with its stricter rules.
Each Derby (and Nottingham) landlord will have different needs and requirements in his or her property investment. We are able to give an objective and unbiased opinion on what (and  what doesn't) make a good property investment. Knowing what has happened to values in different towns, enables us to spot any
trends or opportunities for buy to let landlords.

If you would like to discuss my thoughts on the rental markets, please feel free to pop into our offices on St.James Street, contact me on 07977 235545 or drop me an email; simonj@professionalproperties.co.uk

If you would like to arrange a FREE RENTAL VALUATION then click HERE.
If you would like to see our selection of Investment Properties for Sale, then click HERE.

Call me at our office on: 01332 366171 or visit the website: www.pplets.co.uk

Which type of properties sell the best in Derby?

Knowing how saleable a property is half the battle when deciding what (or not) to buy for your next property investment. Why? Well because one day, you may need to sell that property. If you go into the purchase with open eyes, you know most of the risks and can barter the price accordingly if you have to.

Bearing this in mind, last week, a couple from Littleover popped into our offices to ask about investing in property. Their concern was if we have another property slump (and we will because that is what has happened to the British property market ever since the 1950’s), if they did need to sell, what type of property would be easier to sell. Now, everything sells, even during a slump, but I did some research and followed up their query – I was actually quite surprised with the results.

A good guide to judge the saleability of property is the number of properties for sale, compared to the numbers that are sold, subject to contract. Now I carried out this comparison last week, so the numbers will be marginally different today, but in Derby, there are 2,992 properties on the market for sale. Of those, 1,720 are fully available on the open market waiting for a buyer and 1,272 have buyers and are sold subject to contract. That means 42.5% of property on the market has a buyer in Derby.
However, delve deeper, and in Derby today, 42.1% of detached houses on the market have a buyer and great news for semi owners, as 48.1% of them have buyers. Terraced  houses fair a little worse, with only 283 of the 733 on the market having buyers (making 38.6%). The properties  that appear to be sticking though are apartments – only 79 of 220 on the market have buyers, a very low 30%. Leaving the best to last, its bungalows that surprised me, over 48.6% of them having a buyer.

I am always giving advice to my existing and new landlords in Derby on what to buy (or not as the case may be).  You see, I have always thought the right bungalow in the right location could be a different buy to let investment?  
Having this detail of information at my finger tips, allows me to spot trends in the local market, which then enables to me to give the very best advice to my clients. I don't charge for that advice as I have plenty of opportunity to earn money by finding the best tenants for my landlords in the years to come on the investments I have advised on.    

Final thought though, before I go, in the Burton on Trent property market, only 36.9% of  properties on the market have a buyer .. that is over a fifth less than Derby!

If you would like to arrange a FREE RENTAL VALUATION then click HERE.
If you would like to see our selection of Investment Properties for Sale, then click HERE.

Call me at our office on: 01332 366171 or visit the website: www.pplets.co.uk

Chellaston could be a buy to let secret..

One of the final chunks of census data has recently been released by the Government, and for those of you that like to look at the data, it is a treasure trove of information. Information is so important when making decisions on what (or not) to buy when investing in property.

A few weeks ago, I was discussing the house price trends by comparing two postcodes in East Derby. Today, I want to look at Chellaston on the South side of Derby. The census data allows anyone to look at the data for housing estates, but even better down to individual roads. Such information allows us to weigh up potential hotspots in the rental market and show potential landlords where there could be an opportunity.

Therefore, I looked at Chellaston as whole. There are just over 15,000 people living in 6,203 properties in the suburb of which 43% of the property are detached compared to the Derby average of 23%.
However, it is the home ownership percentages that really get me interested, as it is this information, tied in with our intimate knowledge of the market, where we can match tenant demand to an under supply of rental properties. In Chellaston, of those 6,203 households, 31% own their property without a mortgage and an additional 40% of households own their property with a mortgage. Only 9.3% (or be exact 578 households) are in the private rented sector in Chellaston (compared with the Derby average of 15.6%).

Therefore, with such excellent demand from tenants but a below average percentage of available rental properties, this could be the right area to purchase your next buy to let investment.

If you are considering buying a property for investment in the near future, I am always happy to give you my considered opinion on which property to buy (or not as the case may be) to give you what you want from your investment.

If you are a landlord, new or existing, feel free to pop through the door of our offices on St. James Street, call me on 07977 235545 or send me an email to the email address below.

If you would like to arrange a FREE RENTAL VALUATION then click HERE.
If you would like to see our selection of Investment Properties for Sale, then click HERE.

Call me at our office on: 01332 366171 or visit the website: www.pplets.co.uk