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