Is the Derby property market a Runaway Train?

Some of my landlords invest for yield, some invest for capital growth (however, it’s very difficult to get both in this market). Everyone is different; if you are a landlord in Derby, who invests for capital growth as opposed to yield, it is crucial to look to build in capital growth in a  property by getting a property at a discount or by finding a way to add value.

So, how can you get a discount in this property market, with Derby property values alight and property being snapped up over night? Achieving capital growth in Derby is going to be tough over the coming few years isn’t it?

Well, yes and no.

Looking at the headline figures, of the 3,044 properties available for sale today in Derby, 1,211 of them are sold subject to contract, an impressive 39.8% which could indicate a sign of a runaway Derby property market? Well, no it isn’t. Don’t get me wrong it is a lot better than it was a few years ago, but there are still good property deals to be had.

We asked Rightmove for all of the properties that had come on to the market in the last 28 days (888 to be precise), after one month, how many of those 888 had found buyers .. less than one in five (162 to be precise or 18.2%). Look at the last 56 days (2 months) and of the 1,524 properties that have come on to the market in Derby, only 400 have a sale agreed on them (or 26.2%) .. The property market is good but it’s not a runaway train, is it?

The main thing is that landlords must take as much advice as possible. They will need to take a long and serious look at any existing properties or new ones to make sure they can achieve capital growth and that this increases in line with inflation. I have a great technique for finding properties that have been on the market for sale over three months or more. You don’t need any special software. All you need to do is ask Rightmove to list your search results (when searching), with the most recent first. The ones on the last few pages are by definition, the ones that have been on the market longest and potentially ready to do a deal .. simple but  effective.

We have many landlords who send me a web link of any Derby properties they are interested in and I always give my honest opinion. (It might not be what you want to hear, but it will always what you need to hear!).
So why do we do that? Well, we are a Letting Agent. Once you’ve bought the property, we would very much like to manage it for you or help with just finding you a tenant. If we give our opinion, at no cost or obligation, then we start to build a relationship, you may just start to trust us and as we will be giving you great customer service, which at the end of the day, is what landlords want from their letting agent and you might end up asking us to be your agent in the future (but of course there is no obligation to do so).

With that considered, it’s very much in our interests that you buy something that’s sensible and lettable – we don’t want you buying a dud, or something where the figures don’t stack up!

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

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

Cheap fees and free cheese in Derby!

I went out to a rental valuation a few days ago in Allestree and, as I always do, did my preparation on the property, the area and suitable tenants. I introduced  myself but, before I could begin speaking, he said “How much then? What are your fees?”. Now don’t get me wrong, the subject comes up pretty much most of the time but not usually that quickly!

It got me thinking about landlord fees and how landlords perceive agents. Lots of agents advertise ‘Free fee deals’ – we have in the past! Do they work? No! But why don’t they?

Well, at my local Sainsburys at Kingsway, they often give out free cubes of cheese. Does it sell more cheese? I doubt it!
‘Free’ is a fine way to grab attention, but more often, it's the wrong sort of attention. How many times have you taken the free sample from the supermarket and gone on and bought that product …?
When I discuss our fee packages with potential landlords, they always ask "What do I get for that and is it worth it?"  The shoppers at Sainsbury’s who munch four pieces of cheese aren't asking that question. When focusing on free, the 'worth it' question never comes up, because when seduced by the zero price alone, we fail to answer the question about worth or value.

In a meeting the other day, a new employee asked me “How can some agents in Derby charge such a small fee for a fully managed service?”. “It depends on your definition of a fully managed service” I replied with a wry smile!

So, is a cheap or non-existent fee at the forefront of a landlords mind?  No, it’s not! I can put my hands on lots of independent reports from lots of property experts, where thousands of landlords are surveyed each year, and each year, only 3% to 5% landlords want the cheapest fee.. most want the best value fees.. and value is measured when someone says, “What do I get for my money?”
So Mr and Mrs Landlord, if you have a rental valuation always ask  the question; “What do I get for my money?” Even ask your existing agent the same question when your current tenant leaves because, let’s face it, that’s the ideal time to switch!

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

The battle of the postcodes in East Derby.

I was asked last week if postcodes make a difference to property values. Well in swanky West London, the difference between SW3 and SW10 can make values drop or rise by hundreds of thousands of pounds.

However, in our little city of Derby, we don’t have many Russian Oligarchs and Saudi Prince’s buying our properties. Despite that, after doing some investigating, I did find out some interesting information. I would like to start with East Derby (I will look at other parts of the city in future articles). I found an amazing trend that I think will interest the people of East Derby as well as landlords and potential investors.

Over the last decade, property values have always risen in Allenton, Alvaston and Boulton Moor first (DE24), then they plateau allowing Chaddesden and Spondon (DE21) to catch up 18 months later. Then Allenton, Alvaston and Boulton Moor have another spurt, again leveling out and now we are half way through Chaddesden and Spondon catching up again. I have no idea why this happens, but I just know it does!!

Let me explain further. In 2008, property values in both areas were roughly 11.7%  lower than they are today, therefore they had plateaued. By the time we had got to 2010, Allenton, Alvaston and Boulton Moor (DE24) had risen by 3.3%; compared to 1.5% in DE21 (Chaddesden and Spondon) doesn’t sound much but it’s over twice the growth of the other!

Get to 2012, and Chaddesden and Spondon had caught up, increasing by 6.9% compared to Allenton, Alvaston and Boulton Moor’s growth of 3.7%. Since 2012 Allenton, Alvaston and Boulton Moor have had another spurt of 4.6%, compared to Chaddesden and Spondon’s  meagre 3%. I believe over the coming few years, Chaddesden and Spondon will have another spurt to catch up.

Therefore, 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. It really is down to local area knowledge and knowing what to look for in the figures and statistics that are available.

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

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

Visit the website: www.pplets.co.uk