If you listen to the news or read the papers you'd assume that as the property sales market picks up & more properties come onto the market they'll all be snapped up by BTL investors waiting in the wings but it just doesn't work like that..
Now that we’ve been posting our recommendations on investment properties for some time I occasionally get approached by our current landlords looking for our help in offloading their properties in this way
I’m happy to help, but explain that to appeal to our investor audience the property must stack up as an investment, typically returning a Gross Yield of at least 6.5%
In the case of investors simply wishing to cash in one of their assets this is often achievable - if the property was purchased based on sound investment advice at the time it’s likely to be of interest now as it was then
Unfortunately more often than not it’s the ‘Reluctant Landlords’ who approach us, having heard that the sales market is showing signs of recovery and more often than not their property will not deliver the returns to make it of interest to an investor
If you listen to the news or read certain articles in the press you’d assume that as the sales market picks up and more properties come onto the market they will all be snapped up by investors waiting in the wings but it just doesn’t work like that – the investors are likely to be looking for very different properties in different areas to those being offered by Reluctant Landlords
As an example, using a couple of very different properties that are very close to each other, a typical (and admittedly very rentable) ‘Reluctant Landlord’ 3 bed semi-detached property in Sevenoaks Drive, Hastings Hill (SR4) will achieve £550 - 595pcm but with an average sale price of £150,000 will only return at best 4.7% Gross Yield
Compare that to something that will appeal to an investor less than half a mile down the road in Grindon; a 2 bed ex-council property will achieve £450 - 495pcm but based on an average sale price of £85,000 will deliver a much healthier 6.4% – 6.9% Gross Yield
When I tell the Reluctant Landlords that they’d need to accept nearer to £100k - £110k for their Hastings Hill property to appeal to an investor they often decide either stick to the rental market or to look at selling to owner occupiers instead!
Of course as many ‘Reluctant Landlords’ have actually had a positive experience of renting out their property in recent years, some are happy to sell up and use the funds released to purchase one or more ‘true’ investment properties