One of our oversees landlords came back to the UK last week for a quick ‘sort out’ of his affairs, and as we manage his property portfolio in Nuneaton we were on his list of people to catch up with. We spent a good few hours discussing the Nuneaton Property market and where it has come over the past few years, and also the possibility of him investing in a couple more properties in Nuneaton as the ones he has with us are already reaping the benfits so nicely for him.
Before I could advise him, I reminded him that the most important thing when considering investing in property is finding a Nuneaton property with decent rental yields for income returns, yet at the same time, it must have the potential for capital growth from rising house prices over time. Going into 2016, Nuneaton landlords will be under more pressure to find the best variation of yields and capital growth, as extra stamp duty charges for buying properties and a squeeze on mortgage interest relief will raise their costs.
However – you knew there would be a however – before we look at yield and capital growth, one important consideration that often many landlords tend to overlook, is the propensity of how likely the rent will increase. Interestingly, the average rent of a Nuneaton buy-to-let property currently stands at £646 per month, which is a rise of 7.2% compared to twelve months ago – although it must be noted this rise in rents is for new tenancies and not existing tenants.
Anyway, back to yield and capital growth, the average value of a Nuneaton property currently stands at £178,914, meaning the average yield stands at 4.33% per annum, which on the face of it, many landlords would find disappointing. That is the problem with averages, so if I were to look at say, 3 bedroom houses in Nuneaton which are the sort of properties a lot of landlords buy, I would be looking at an average value of around £105,000, whilst the average rent for a 3 bedroom house is £600 per month, giving a yield of 6.86 %. However, if that wasn’t high enough, there are landlords in Nuneaton who own some specialist properties with specialist tenancies, that are achieving nearly double that yield – again it comes down to your attitude to risk and reward! Give me a tinkle or drop me an email if you wanted a chat about those sorts of properties – although they can be fun and games!
Ultimately investors want to be making gains from both rent and house price growth. When combined, the rental yield and capital growth gives you the return on investment, and that is what I told our Oversees Landlord. Return on investment is everything. So, looking at property values of your average terrace in Nuneaton, they have risen in the last year by 3.86% …which means the current annual return on investment in Nuneaton for a typical 3 bedroom terrace house is over 8% a year… not bad eh?
Whether you are a soon to be new landlord or you are an existing, experienced landlord in Nuneaton, you should have a read of my blog www.nuneatonpropertyblog.com for weekly updates on buy to let opportunities as well as other relevant information and updates relating to the Nuneaton property market.