I’ve been spending a lot of time in the north just lately and there’s a buzz around the northern property scene. Two trips in as many weeks for interested clients and it’s clear I’m not the only one looking. Would-be southern landlords are turning-up in the most unlikely places, drawn by lower prices, higher yields and the chance of a credible source of passive income. My enquiries from keen newcomers are up. I’ve also been encouraging my existing landlord clients to re-think their strategies and look north too.
This comes at a time of recent tax changes causing some to lose confidence in the buy-to-let model. Whilst it’s sensible to do your research (check out this ‘Which’ guide) tax surely only exists on houses that make profit; and there do appear to be profits to be made.
Here a bit of guidance and a few suggestions on how you might go about it:
‘The South’ is perhaps best avoided for a bit. There are still some places with prices rising and moderate rental yield but mostly the value is North. The stats suggest this starts around Birmingham and goes north from there where yields are higher and prices are lower but rising
Think about your strategy. Is it a high yield you’re after or capital growth? The distinction is important. I personally think a place like Stoke, where prices are extremely low, is a place for landlords who want yield, but isn’t all that likely, at least in the near to mid-term, to jump in value as much as bigger cities like Liverpool, Manchester & Leeds. Here you have desirable places to live, work and bring up a family. Plus they’re firmly on the radar for some very big investment projects that are happening too. For capital growth I’d be more inclined to put my money here
Realise the value in your existing properties. If you’re a landlord already who’s seen a significant increase in the value of your houses or flats over the past few years, you need to be bold. Look at using the equity you’ve amassed by re-mortgaging or sell one or two. Something I’m doing myself in fact. You’ll be surprised how far your money stretches in the north & a rental yield of 6% is quite achievable
£30k will do it. Less in some areas. You can borrow the rest on a buy-to-let mortgage (the amount’s calculated the rent you’re likely to get on the place you intend to buy). A house costing £120k is within your grasp with £30k and at current rates, you’ll pocket at least £250/month after you’ve paid the loan & agent fees, whilst all the while, sitting on an appreciating asset
Communications are key. While a city’s prices may rise generally, areas with particularly good links will do best. That and big business or development plans for an area, of which there are many going on now
Do some serious research. You get big differences from area to area and even street to street. If you’re short of time or busy at work, employing a property finder who knows an area or will research it for you is a sensible thing
Be ready to move fast. If you have the cash, great; you’re in the strongest position for sellers who want a quick deal. If not, have a mortgage ready to go. I can help you with that
Pay the right price but don’t over-do it. There’s an expression: ‘you make your money when you buy’. Whilst it makes total sense and I’m all about ‘the deal’, there’s also a touch of ‘you snooze you lose’ to things at the moment. You make your own call on what represents good value of course and I can advise on that. You don’t want to spend over the odds but will £127k over £125k seem so significant in five years time? While you pour over the detail, others are generally getting on with it and in a rising market, that’s where you need to be
Don’t be scared-off. Property seems a scary prospect for the uninitiated. It really isn’t difficult once you get started. Like everything, do it once and it gets easier. Do it again and it’s actually very rewarding and enjoyable.
If you’re worried about not knowing how to do it, get people around you that do. I have contacts in finance, mortgages, conveyencing and lettings that will take care of everything, (incidentally I don’t take commission from any of my contacts) so you get the investment you’re after with minimal fuss and can immediately start enjoying your new life as a buy-to-let landlord and with a new passive income stream