Is it still possible to find an investment property which will give you a decent return when property prices are so high?
The cost of property is not just a subject preoccupying first time buyers, it’s also a concern to investors looking to achieve a decent return. As one of my landlords put it ‘How am I supposed to make any kind of return when everything costs so much?’ Indeed nowadays even at auctions, what seems like a bargain when you look at the guide price will invariably sell for much, much more.
However little gems can still be found. At Belvoir we keep a track on local sales to help us spot bargains when they come up. In August 2012 a three bedroom terraced house in Seaford Gardens, EN1 sold for the bargain price of £230, 000. Now granted it needed a lot of work and was renovated to a very high standard which lead to it achieving a sale price of £405,000 when it sold again in September last year.
That’s an impressive increase in value of £175,000 or 76% in 2 years, compared to average growth for EN1 of around 18% over the same period.
A good quality property in that area will also achieve a rent of around £1,550pcm which would provide an equally impressive gross yield of around 8.1%. And even factoring in renovation costs of say £30,000 the yield would still be around 7.2%
Great yield and great capital growth, who says you can’t have both?
Whether you are a landlord of ours or someone thinking of investing in rental market for the first time please feel free to contact me for a chat about the local property market.