Struggling to sell? Why not rent?

One of the main sources of new properties to the rental market over recent months has been from people who can't sell their property for a price they are happy with, so rent it instead. These properties are usually popular with tenants as by their nature, they tend to be family properties in nice areas. As such finding a tenant isn't usually an issue. However if you are an 'accidental landlord' the overall success of letting your property depends to a large extent on your understanding and acceptance of what being a landlord involves.

What do I need to do before I can rent my property?

The vast majority of this will be covered by a competent letting agent when they visit to appraise your property. Getting a couple of ARLA agents round will identify key points that come up again and again – these are the ones that really need your attention.

• Switch your buildings and contents insurance to a Landlord specific policy. Your insurer won't pay out if you haven't told them the property is rented.

• Get the relevant safety certification sorted out for your property. Again a competent agent will assist you with this.

• Sort out any little imperfections that you know exist in the property, and that you put up with yourself – once someone is paying you money to live there, they won't put up with it like you did. Cupboard doors that don't quite close properly are a classic example!

• Think health & safety! A small pond in the garden may have been fine whilst you lived in the house alone, but is not fine if your tenant has 2 small children. You must protect your own interests by dealing with issues such as this.

• Clean it! This isn't always the easiest thing to get across to someone who's lived in a property, but look at it this way – if you pay for a professional clean before the tenant moves in, you can expect the property back with a professional clean done too.

Will I be satisfied with the rental experience?

We find that 'accidental landlords' are often less satisfied with the whole rental experience than people who have bought property specifically as an investment. To an extent this is inevitable as renting the house is not ideally what they wanted to do. To make it work, your expectations need to be realistic:

• Detach yourself! Although you may have lived in the house for 10 years, at the point you rent it you need to make a bit of a mental adjustment – the property is no longer your home and is now a commercial investment! If anything it's someone else's home. The key thing for you is making the investment pay.

• Be flexible. Although you may love your flowery green carpet, this isn't something that will necessarily appeal to a tenant. Don't be offended if your agent politely suggests changing things like this – they only make suggestions like this because they know if will enable them to find YOU a tenant more quickly.

• Accept that a tenant rarely cares for a property quite as well as an owner. You should not expect damage, but you should expect wear and tear. If you rent to a family with young children, spills, scuffs and scrapes are inevitable – this is part and parcel of renting a property. In particular tenants rarely maintain a garden like an owner does – if you've spent the last 20 years developing prize winning flower beds, don't be surprised when the tenant doesn't share your enthusiasm!

• Don't drive by every day and worry! If they don't cut the front garden or clean the front windows quite as often as you did, you can't insist on them doing this, unless they are fundamentally neglecting things. What matters is that the property is returned to you at the end of the tenancy in the same condition it was given, minus reasonable wear and tear.

What does an agent do?

Most 'accidental landlords' choose an agent to manage their property, rather than doing so themselves, as they don't have experience of letting, and don't know much about tenancy law. It's always a good idea to get a couple of different ARLA agents round and listen to what each has to say – in that way you'll get a flavour of what each can offer. Remember that finding a tenant is the easy bit – the skill is in looking after the property on an ongoing basis. You'll find ARLA agents are better geared to do this than estate agents who have opened a lettings department.

Don't make the classic mistake of choosing the cheapest unregulated agent in town. Your rental property is one of the biggest financial commitments you'll make in your life, and you want some assurance firstly it is being properly looked after, and secondly that you have some redress if it isn't. 

If you would like to discuss renting your home, come and see us here at Belvoir. We are situated at 200 Northdown road in Cliftonville. Alternatively give us a ring on 01843 293 293.

Is the West Cliff area of Ramsgate the place to buy a buy to let?

A couple of weeks ago I had a couple pop their head through the doors of my offices on Northdown road. They live in Canterbury, near the Golf course, and wanted to pick my brains on buying their first buy to let property in Thanet. They were particularly interested in the West Cliff area of Ramsgate, particularly around the football ground.

Therefore, I looked at the area around Southwood road. From January this year, 27 properties have been let with 7 more currently on the market at the moment. The average time it is taking to let a property here (the time between first day of marketing and tenant moving in) is 27 days. This is important for investors to know as they should factor this in to their costs as it would be a month without income. As always it is worth taking into consideration the possible capital growth. I used a property in Hebert road as an example. It sold in April this year for £119,000 (am sure would have been more if the kitchen and bathroom had been modern) and in 2004 it was sold for £80,000 giving a capital growth figure of 48.75%. Sticking with this same property, the likely rent would be in the region of £750 giving a gross yield of 7.5%. With such excellent demand from tenants and excellent amenities surrounding this area (easy to reach bus links, less than a mile to the train station and local shops within walking distance) could this be the right area to purchase your next buy to let investment?

If you are considering buying a property for investment in the near future, as I don't sell property, I am always happy to give you my considered opinion on which property to buy (or not as the case may be) to give you what you want from your investment. If you are a landlord, new or old, I am more than happy for you to pop in and see me or email on gavin.horton@belvoirlettings.com

Monoply in Margate. How would you play?

A couple of local landlords and I had a discussion about the property market in Margate, when the subject of risk against returns arose.

All Landlords are different in the way they play the property game. Some landlords prefer to accept a modest yield/return on their investment for an increased certainty of finding a quality tenant. Other Landlords are interested in high returns, with a greater risk with regards to the quality of tenant. Before you start playing, it is a good idea to have a game plan.

For a low risk investment, you could buy property in the areas of Margate which are perceived as being more desireable, such as the Palm Bay estate, where you can achieve annual yields in the region of 4-6%. If you don’t mind a slightly higher risk of void periods or varied quality of tenant, you will more than likely achieve higher yields in the region of 6-8%. The types of properties you would be looking at here would be in the Cliftonville area and generally be two bedroom apartments or three or four bedroom houses. If you are after higher yields of 9% and over, you could take more of a risk with houses of multiple occupancy but these are generally filled with less desireable tenants naturally leading to ongoing issues, therefore they are ideal for the risk takers amongst us.

If you are interested in investing in Thanet or need some advice on how to get the best out of your current property investments then come in and see us. Our office is along Northdown road in Cliftonville. 

Can you get a decent buy to let investment in Margate? You bet!

During our ‘Official Opening’ a couple of weeks ago where the Mayor of Margate kindly cut the ribbon on our shiny new office, I was chatting to a developer who has a very large portfolio of property throughout Thanet. We were chatting about the local towns and how Margate had seen an upturn in fortunes and had a ‘feel good’ factor to it. He informed me that he was no longer actively looking to invest in property because sale prices had risen yet rental prices were largely staying the same. Meaning he wasn’t getting the sort of yields he was after, and since he had no intention of selling or leveraging, capital growth didn’t have much of a hold on him.

I agreed with him to a certain extent that prices had risen and yields weren’t increasing like an investor would like, but only to those who weren’t actively looking. For instance, we recently had a Landlady who has only two properties, one she lives in and one she has recently bought as a pension fund if you like. So she is hardly a professional landlord.

We sat down with her back in February and together kept our eyes on the markets looking for something that would suit her needs, bring her steady income from a reliable tenant whilst also providing potential for significant capital growth.

We found her a property in Church Street in Margate. A 3 bedroom mid terrace, she bought it for £95,000. We have just let this property to a very reliable tenant who has not defaulted on rent for at least 11 years. We let it for £675 pcm. Giving a gross yield of 8.5%! Not bad! The property next door sold for £93,000 back in February this year. It sold back in 2000 for £48,500. So over the 14 years it has increased in value by over 91%. Therefore we managed to find her exactly what she is after. Admittedly it isn’t always possible, but if you are not actively seeking then you will not find.

So to summarise, yes the property market may be at a stage where it isn’t throwing out fantastic bargain after fantastic bargain, but there are some real gems out there. Be patient, speak to specialists, and be ready to pounce when you find it.

If you would like any help at all in finding your next investment then please come and see us, our office is along Northdown road. We look forward to meeting with you.

Come on, thats something to shout about! 

Ramsgate property market Vs Margate property market

I was in a discussion with a local landlord who lives in Ramsgate, we got chatting about where he was going to buy next. Interestingly, he had several properties throughout Thanet, Herne Bay, Canterbury and Sandwich. I did some research to find out how our local markets had been doing over the last year.

The average price of terraced property in Ramsgate sold last year was £152,399. When you consider the rents that are achieved for these type of properties are on average £662 per month, this gives us a Gross Yield of 5.2% per year.  In Margate last year, the average sold price for the same style property was £137,343 and would rent on average for £618 and give a gross yield of 5.4%.

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 12 months, property values have only risen on average by 3% in Ramsgate. However, average property values in Margate have risen on average by 9% in the same time frame. Interestingly the Market in Margate is only 5% away from reaching the peaks of 2007 yet in Ramsgate it is 9% away from the peaks reached in 2007.  The question that every landlord must ask from their investment is, do you want capital value or yield?

I always tell investors, capital growth and yield are two phrases that are one and the same with property investment and can have a big impact on the long term results of your property investment.

Many investors believe that by chasing high yielding properties they will make a faster profit than waiting for capital growth. The problem with this is that to achieve high yield you usually have to compromise on capital growth. Therefore, it would seem the most logical solution is to find high a yielding property in a strong capital growth area. Such properties don’t exist (or if they do, I don’t know of them!)

This is because, as I tell my landlords, there is generally an inverse relationship between yield and capital growth so the higher the yield, the lower the capital growth and the higher the capital growth, the lower the yield. This means property investment becomes all about balancing the scales. Whether you are a new landlord or an existing landlord our advice is completely free and impartial. So, feel free to pop into our office in Northdown Road, Cliftonville for a chat about the property market in our town.

Deal of the week is in Manston!

As I scrolled through the websites this week, I happened to stumble upon this little gem. Currently on the market at £115,000. It is a 2 bedroom maisonnette with allocated parking situated in a quiet rural location. The property would likely achieve a rental income circa £675pcm giving a gross yield of  7%.

For more information on similar bargains give me a ring 01843 293 293.

(This property is being marketed by xpertagents)

To buy a flat or not to buy a flat? That is the question.

A property investor from London called me last week looking for objective advice as he had been offered a ‘Below Market Value’ 2 bedroom apartment in a modern development in Margate.

Even before he told me the name of the development, I could work out where he meant and quickly steered him away from this, pointing him in the direction of the sort of properties in the CT9 postcode that may not be as ‘sexy’ as the one he’d been offered but will inevitably stack up as a much better investments.

We rarely advise investors to purchase flats or apartments in or around the Cliftonville area due to oversupply forcing rents down and also the constant churn of young tenants which will eat into their returns.

That said, flats should not be discounted out of hand, as they often require less maintenance and upkeep than houses and may be available more affordably – but we advise canny investors to do some stringent research which should lead to picking up a bargain and for a steadier stream of long term, working tenants.

In certain areas of Cliftonville and Margate there are developments of 2 bedroom flats that are always popular with tenants due to the proximity to transport links, the beaches, shops etc – in fact there is a 2 bedroom 2nd floor flat in Palm Bay that will easily achieve £600 pcm & therefore return 5.8% gross yield if the total cost of investment was £125,000. Given 2 similar flats in an identical block sold last year for around £145,000 this looks very realistic and achievable.

On the other side of Margate in Westbrook we always find it easy to rent the 2 bedroom flats that have been converted or newly built in the Royal Sea Bathing Complex to good working tenants. These versatile flats appeal to a wide range of tenants due to their handy location, close to Margate Station and the beach as the rear garden! Our newest Landlord has just let one for £695 pcm whilst she purchased it for £142,000 giving a gross yield of 5.9%.

To summarise, Flats and Apartments can prove to be a very astute investment. As long as you have the right knowledge and advice. So if you are thinking of investing then give us a call, we would be happy to help.