Following a discussion with a local landlord who lives in Cassiobury, we got chatting about his two buy to let properties in Watford and how property in the Holywell Estate, where one of properties is was so different to the Cassiobury area where he owned the other. We got talking about the two properties in both areas and he wanted some advice on where to buy the next one. I did a comparison between the two and was surprised to find that the property market in the Holywell Estate area had outperformed the Cassiobury market by 38%!
The average price of 3 bed house on the Holywell Estate is £238,100. When you consider the rents that are achieved in the Holywell Estate are on average of £1,124 pm, this gives us a yield of 5.66% per year. So is the Holywell Estate the best investment? Well, in the Cassiobury area the average value of a detached property is £527,800 and the average rent is £1,798 pm, giving a much lower yield of 4.08% per year, making the yield/ return on the Cassiobury area, 38% less than property in Holywell estate, so surely it is the best investment, isn’t it?
This, however, is a great example of annual yield/return not being the only factor when choosing an investment property, as you should also consider how much the value of the property goes up in the long term. In the last 13 years, property values have risen on average by 70.3% in the Holywell Estate which is very impressive considering there was the 2008 property crash). However, average property values for detached properties in the Cassiobury area have risen on average by 90.5% in the same time frame.
So, if you are invested in Watford property, do you want capital value or yield? If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market, please come and see me at our office on St Alban’s Road in Watford.