It pays to plan your property investment in Derby

The buy to let sector in Derby, in fact the whole of the East Midlands buy to let sector is doing very well at the moment, but it can be a minefield.

I could regale you with many stories where investors have got it tremendously wrong in Derby, like some modern apartments on Drage Street in Chester Green, that were sold for an eye watering £168,000 in 2005, only to be selling today for £95,000/£97,000, a drop of over 42%. It is interesting to note that at that time in 2005 for £165,000, you could have bought a lovely 3 bed bay fronted semi in Littleover or a four bed detached house in Sunnyhill. A two bed apartment for the same price as a decent semi or nice modern detached house, doesn’t in hindsight, quite stack up. The thing is, I still see mistakes being made on a day by day basis in Derby. If you make even a small mistake, it could still prove to be very costly.

So what should you buy in Derby? One option is Houses of Multiple Occupation (HMO’s). While they can be profitable, chiefly in the student market with Derby University students, they can make things much more complex and costly, with the need for HMO licences etc. If you look back at some of my previous articles listed on ‘The Derby Property Blog’, you will see a lot of interesting facts on which types of properties let well, as well as sell well!

Mortgage rates on buy to let are really low at the moment and for the right property and person you can get rates below 3.9% if you put down a decent deposit of 25%, but the best rates are for deposits of 40% deposit and, as I type this, you can get a 5 year fixed rate buy to let mortgage from the Post Office for 3.65%. Also, the deposit will ensure you have plenty of equity in the property, if the property market stagnates in the future. The important thing to remember is the amount you can borrow is driven by the rental income, so it is vital you can identify a property with a decent yield that lets easily.

Finally though, if are investing so much time and money in building wealth for you and your family, it is equally important for you to identify ways to protect it. Do not forget, if you spend years building a successful property empire in Derby, when you pop your clogs, your family could face an inheritance tax bill of 40 %, which they would have to pay within six months of the death. In a buoyant market, selling in six months is not an issue, but what if the market was like it was in Derby between 2008 and 2012, when things took seasons to sell, not weeks. Quite apart from losing nearly half of the assets you built for your family to the tax man, if they had to sell some of your portfolio,  possibly at a discount because the taxman wanted his money so quick, it might be wise to consider some life insurance that will offer protection against inheritance tax.

There are plenty of good advisors in Derby that can help you with the mortgages and life insurance. We aren’t one, because we are a letting agent, but what we can help with is choosing the right  Derby property to buy. It’s in our interest to do so, because if we offer the best advice and opinion, without any conflict of trying to sell you anything because we aren’t estate agents so have nothing to sell you, you might consider, although there is no obligation, to trust us to manage the property.