The mind-set and tactics you employ to buy your first Warrington
buy to let property needs to be different to the tactics and methodology of
buying a home for yourself to live in. The main difference is when purchasing
your own property, you may well pay a little more to get the home you (and your
family) want, and are less likely to compromise. When buying for your own use,
it is only human nature you will want the best, so that quite often it is at
the top end of your budget (because as my
parents always used to tell me – you get what you pay for in this world!).
Yet with a buy to let property, if your goal is a higher
rental return – a higher price doesn’t always equate to higher monthly returns
– in fact quite the opposite. Inexpensive Warrington properties can bring in
bigger monthly returns. Most landlords use the phrase ‘yield’ instead of
monthly return. To calculate the yield on a buy to let property one basically takes
the monthly rent, multiplies it by 12 to get the annual rent and then divides
it by the value of the property.
This means, if one increases the value of the property using
this calculation, the subsequent yield drops. Or to put it another way, if a Warrington
buy to let landlord has the decision of two properties that create the same amount
of monthly rent, the landlord can increase their rental yield by selecting the lower
priced property.
To give you an idea of the sort of returns in Warrington...
Warrington
Property type
|
Average
Price paid (last 12 months) in Warrington
|
Average
Rent Achieved in last 12 months in Warrington
|
Lower
End of Yield Range in Warrington
|
Average Yield in Warrington
|
Upper
End of Yield range in Warrington
|
Detached
|
£301,726
|
£1,195
|
3.37%
|
4.75%
|
5.59%
|
Semi-Detached
|
£175,668
|
£762
|
4.35%
|
5.21%
|
7.03%
|
Terraced
|
£126,118
|
£723
|
5.64%
|
6.88%
|
9.79%
|
Flats
|
£109,446
|
£576
|
4.94%
|
6.32%
|
7.27%
|
Now of course
these are averages and there will always be properties outside the lower and
upper ranges in yields: they are a fair representation of the gross yields you
can expect in the Warrington area.
As we move forward, with the total amount of buy to let mortgages amounting to £199,310,614,000 in the country, landlords need to be aware of the investment performance of their property, especially in the era of tax increases and tax relief reductions. Landlords are looking to maximise their yield - and are doing so by buying cheaper properties.
In Warrington, for example, over the last 20 years, this is
how the average price paid for the four different types of Warrington property
have changed…
·
Warrington Detached Properties have increased in
value by 230.1%
·
Warrington Semi-Detached Properties have
increased in value by 233.6%
·
Warrington Terraced Properties have increased in
value by 248.7%
·
Warrington Apartments have increased in value by
235.5%
It is very much a balancing act of yield, capital growth and
void periods when buying in Warrington. Every landlord’s investment strategy is
unique to them. If you would like a fresh pair of eyes to look at your
portfolio, be you a private landlord that doesn’t use a letting agent or a
landlord that uses one of my competitors – then feel free to drop in and let’s
have a chat. What have you got to lose? 30 minutes and my tea making skills are
legendary!
You can always keep an eye on my blog for any properties I feel will make a good buy to let opportunity, or if you are after a second opinion then email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on 6 Bankside, Crosfield St, WA1 1UP. There is plenty of free parking and the kettle is always on.
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