Ex-council Princess Drive semis out perform Stephenson Ave property market by 49%

We all know Stephenson Avenue as one of the sought after places to live in Grantham, as it’s the major entry road into the modern Gonerby Hill Foot Estate with good schools nearby. The average property here sells at around £175,400 and the average rents are £637 per month.

These are reasons a landlord came to our office to find out if Stephenson Avenue would be a better rental investment than Princess Drive, where she has a property at the moment. When we compared the two, we found Princess Drive is made up of three bedroomed semi-detached properties which were built in the 1950’s and are ex-local authority. On average they sell at around £98,700 and can rent at around £525 per month.

It became interesting when we compared the possible annual yields, as Stephenson Avenue could achieve 4.3% per year but yields are proportionately 49% more on Princess Drive at around 6.4% per year. However, we must remember that yield is not the sole consideration when investing in buy to let. The average value of property on Princess Drive has risen by 52% since 2001, but Stephenson Avenue has risen by 83%.

Do you want a good yield or do you want capital growth? Remember, since 2001, inflation has been  44.4% according the HM Government.

So Princess Drive has only gone up, in REAL terms by 7.6%  (52% less 44.4% which equals 7.6%) whilst Stephenson has gone up in REAL terms by 38.6%  (83% less 44.4% which equals 38.6%)

Yield or Growth?  That is the question!


PS I have had a few Grantham people email me Rightmove links of properties they are considering buying. As I don’t sell houses or even let them (anymore), I am always happy to give my opinion (good and bad) on their suitability as rental investments .. bang an email over and i will give you my thoughts

What not to buy in Grantham for buy to let

Been a way for a few days, so sorry about the lack of posts.

When investing in property, it’s easy to get it wrong. Before I was a lettings agent, I bought a new build 2 bed flat because that’s what everyone else seemed to be doing. I still have it – mainly because no one is going to take it off me for the price I paid for it! You live and learn. But it’s important to remember that you make your money when you BUY a property, not when you sell it. If you buy at the wrong price, it’s more or less impossible to rectify that going forwards unless a rising property market saves you. If you buy sensibly, you can also expect to sell sensibly if you ever need to. Try to avoid:

• Simply overpriced. Once you’ve established you can buy a nice 2 bed property in a given area for £X, don’t pay £X + 5,000 for one because you’re impatient. If you overpay at the point of purchase, you’re playing “catch up” regarding the value of the property from day 1. So DON’T overpay!

• Needs work, and this isn’t reflected in the price. DON’T be put off by properties that need work, as these are often the best buys. But DO ensure this is reflected in the price. If it’s £X for a nice one, its £X minus £5,000 for one that needs a kitchen and bathroom.

• Unrealistic rental price. If you’re buying in an area where flats rent for £550.00, don’t expect yours to rent for £600.00 on the basis that it’s just been painted – expect it to rent for £500.00 if you don’t paint it!

• Lacking key features. If you’re buying in the suburbs to attract the family market, don’t buy the one house on the street that has no garden, or no parking. Families want gardens!

• Following on from my comments above, don’t buy in somewhere like the rougher parts of Earlesfield if you’re looking to attract a private tenant. Accept it will be housing benefit before you start.

Tuesday 10th June Grantham Buy To Let deal of day

Just popped into my friends at the Buckley Wand and they are about to list a stunning 2 bed terrace in Queen Street near the train station for a bargain 79950 .. Won't be round for long .. Not even on their website yet!

Grantham Property market - 8th June 2014 update

A few weeks ago I posted an article about the Grantham property market .... caused a bit of eyebrow raising.

So in the spirit of good eyebrow raising .. here is another update.

Of the 100 properties that have come onto the market in Grantham in the last fortnight, guess how many have sold?

6

13

18

22

26

37

Only 6 my blog reading friends. These are the ones that have sold ..

http://www.rightmove.co.uk/property-for-sale/property-44597281.html?premiumA=true

http://www.rightmove.co.uk/property-for-sale/property-44641318.html?premiumA=true

http://www.rightmove.co.uk/property-for-sale/property-30744333.html

http://www.rightmove.co.uk/property-for-sale/property-30592950.html  (this was a deal of the day 10 days ago .. nice to know I got at least one!)

http://www.rightmove.co.uk/property-for-sale/property-30635622.html

http://www.rightmove.co.uk/property-for-sale/property-41888323.html

So before you all go screaming property market boom.... lets all take a chill pill and be sensible with our asking prices

Gonerby Hill Foot BTL deal of the week - (tenants must like trains though!)

Three bed semi just come on the market yesterday with Newton Fallowells at £109,950. Ok, it looks like it backs onto the train line, but you get nobody looking into your garden except an HST 125 flying by at 100mph. Have a look at the internals  ( http://www.rightmove.co.uk/property-for-sale/property-30592950.html)  and you will see its a little sweetie. I dont think this will be around for long.

Even with the trains, you should get £525 to £550 per month (there is one round the corner at £625 which is steep). Depending what you buy her for, a yield of 6.1% to 6.3% a year is very good.

Now where is my train spotter handbook?

Nice 3 bed detached house in Grantham

Ooo..3 bed detached houses with double garages don't come around that often.

I like this, may be not a decent buy to let, but a property which I like.

http://www.rightmove.co.uk/property-for-sale/property-30510780.html

Grantham property market over heating?

Over the last 14 days, according to Rightmove, which most agents use, 126 properties have come on to the market in Grantham and the immediate surrounding villages.

..... of those 126, nine have sold stc .... only nine ... that is a normal market not a run away market.

Apartment - bargain alert on Marco's site £56,000 .. 8.5% yield

First floor one bedroom modern apartment on Bolsover Road. 

Situated in a popular location within easy access to the train station and Grantham Town Centre. Just off Springfield Road close to the A607 and the A1 both North and South. 

Great for the busy commuter/ first time buyer, buy to let.

At £56,000, this wont be around for long. Rent will be £400 per month so gross yield of 8.5%

http://www.zoopla.co.uk/for-sale/details/33171178

Freehold 3 bed semi on Goodliff Rod - Buy to let deal of the week?

£85,000 makes this 3 bed semi / end town the bargain of the week when it comes to buy to let.

OK, it needs some love and TLC, but wow, what a bargain .. wont be around for long

Link below

http://www.zoopla.co.uk/for-sale/details/33159130

Saturation of the Grantham rental market?

Someone emailed me after the reading the blog and asked about saturation of Victorian terraced houses in Grantham.

Don't worry about saturation - there's no sign of this currently. If you gave a letting agent 10 or even 20 terraced house in Grantham, they would find you tenants, provided you priced them sensibly. They wouldn't be able to find 20 immediately, but I'd do one or two  a week for 10 weeks without too much trouble. Some times with new build blocks of terraced houses in the old Marco’s site(off Springfield Road) they all go to rental and they all complete on the same day. That creates a short term problem with supply and demand, but once the initial hurdle is overcome, normal service resumes.

Whether you should buy new build is another question! Some people do this as it looks nice and everything is guaranteed. If you're a good negotiator you may be able to get the builder to chuck in all the things you need to get it let - appliances, window blinds, flooring. It's an ultra low risk approach to buy to let. However you will always pay a premium for a new build property and whether it makes financial sense is another question entirely! 

Compare these 2 properties:

http://www.rightmove.co.uk/new-homes-for-sale/property-46136780.html

http://www.rightmove.co.uk/property-for-sale/property-29609283.html?premiumA=true

They are both going to rent for the same money - £595PCM. But one is £15,000 more than the other. A lot of people would still be more attracted to the new one as it's much prettier, but if these were the only 2 properties available I know where I'd be sticking my money! What I'd spend the £15k saving on is another matter entirely.

Where should you buy property in Grantham?

Unless you get phenomenally lucky, you cannot have your cake and eat it! There’s a general rule that the better the area you buy in (say Barrowby Gate, Gonerby Hill Foot etc etc), the lower the return you’ll get. This is because you’ll have to pay more to buy property in a nice area, and the amount of rent you’ll get doesn’t rise at the same level. Buying in a less plush area (Earlesfield, Queensway etc) doesn’t mean a property won’t rent, but it does have a bearing on the type of tenant you are likely to attract.

Different landlords value different things – some prefer to accept a modest yield (the monthly return) on their rental investment, in return for more certainty regarding tenant quality. Others are simply more interested in high returns. Before you start out, it’s a good idea to be honest about what would work, or more importantly what wouldn’t work for you. This will then enable you to filter much more easily..

Better Area, Lower Return

The most expensive 3 bed houses are in the new build areas on the outskirts of town.

Because you pay more for these to start off with, the return is never as good. Some

landlords prefer this because of the ‘comfort factor’ of owning in these areas. Paying £160k to £170k gets you a 3 bed detached house, which will let for £650 to £670 per month, a lowish yield of 4.8%. Maybe the 3 bed semi, which will cost you £130k to £135k and a rent of £625K(tops) gives the same safety factor, but a better yield of 5.6%

Middling Area, Average Return

Grantham has a town centre of Victorian Terraced properties, taking in places like Cambridge/College/Oxford Street’s, Victoria / Stamford Street, Dudley Road area, New Street / Redcross Street areas to name but a few. This is staple rental territory - there’s always good demand here from private tenants. Three bed terraced houses can be bought for £85,000 to £90,000 and with rents of £450 per month (depending on condition) , that’s a nice yield of 6.2%

Cheaper Area, Higher Return

If you want your money to work as hard as it can, you need to get into some of the less expensive areas of town. Much of the Earlesfield falls into this category, together with areas like Queensway and Brittain Drive. I know someone who has bought a one bed flat on Shaw Road (back of Northern Foods) for £50,000 recently. Done up, it should rent for the early £300’s a month, giving a yield of 7.7%