Who can really afford to buy a house these days?

The easiest way to judge the affordability of property within an area is to look at the ratio of the average property price to the average salary.  In Weymouth, DT4 the average price is £211k for a three bed house whilst the average salary is £21,237.  This is a ratio of 8.83. 

In Dorchester the affordability ratio is 9.74, meaning property is slightly less affordable.  No surprise there then but perhaps the issue is not this measure of affordability but the other.  Deposit!!  A 5% deposit is in the order of £15/20k

Tenants’ inability to raise that sort of money is driving demand for rental property, something we see every day in this office.  If you would like some advice about buying to let, where to buy, what to buy, what lets best or quickest do come by for a chat at the Martin and Co office at the top of St Thomas Street in Weymouth.

BTL? Do your sums!

A nice two bed flat overlooking the harbour is going to cost in the region of £200,000 and return around 4.2% whilst a two bed house in Sandpiper Way will cost £165,000 and return 4.7%.  This may not sound a lot of difference but actually represents a 12% better return.  

When you take into account the block management costs of a flat, which can amount to the equivalent of two months’ rent you are looking at a 34% better return.  Both properties will rent well and quickly but this does show how important it is to do the sums when investing in a BTL.

Add on the fact that the two bed in Sandpiper Way is around £35000 less money to start with and it becomes obvious where the sensible money goes.  Of course not all BTL investors are only interested in the return and may have other reasons to buy a flat with a poorer return but in a nicer position.

4 things to avoid when investing in property

When investing in property, it’s easy to get it wrong. You make your money when you BUY a property, not when you sell it. If you buy sensibly, you can expect to sell sensibly if you need to.

Try to avoid:

•overpaying. Once you’ve established you can buy a nice 2 bed property in a given area for £X, don’t pay £X + £5,000

•being 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 £7,000 for one that needs a kitchen and bathroom.

•being unrealistic. If you’re buying where flats rent for £550.00, don’t expect yours to rent for £600.00 because you will paint it – expect it to rent for £500.00 if you don’t paint it!

•missing something obvious! Don’t buy a family house that has no garden, or no parking. Families need gardens and parking spaces.

Philip Wakefield Property File

Online or Traditional Agency?

Online or Traditional Agency-which gives you the best chance?

The arguments are raging at the moment over which is the best medium through which to sell your house.  Online or Traditional.  Here are some statistics from Zoopla.

It shows 3471 properties were listed for sale in the DT1-5 area from Jan 1^st to November 6^th 2014.  and  592 are listed as sold subject to contract during that period.

The online only companies  list 34 properties of which 3 are sold subject to contract

Online agencies have therefore sold 8.8% of their listed stock compared to 16.9% sold by traditional agencies.

Admittedly the area sampled is limited but is relevant to our locality and is certainly something to consider when choosing how to market you property

Martin and Co offer both services from their offices in St Thomas Street in Weymouth giving you the best of both worlds.   The cost saving associated with online agencies and the service and help that only a local office can give and also the flexibility to move from Online only to a fully fledged Traditional Service at any point through the sales process.

Philip Wakefield

Martin and Co Weymouth                    01305 775504                 philip.wakefield@martinco.com

November Offers

Sell your House for 0.65% Agents Commission with Martin and Co

Martin and Co in Weymouth are better known for lettings than sales but all that is going to change now.   We have many existing landlords who are looking to expand their portfolio and do not mind if the property they are looking at is tenanted or not so coupled with the offer to sell for only 0.65% commission now could be the time to call us for a valuation.

For Landlords we have our cashback offer currently running which offers landlords who currently have property that is let to receive substantial cashback if they bring management of their property to Martin and Co. Please call 01305 775504 for details.

BREAKING NEWS -TAKEOVER of Legal & General’s Franchise Business

Your local Martin & Co office is now part of one of the biggest property businesses in the UK. An additional 89 offices have joined the Martin & Co Group of Companies, creating a lettings and estate agency chain of 283 offices stretching from Dover to Aberdeen, with 46 offices in London alone!

The Group now manages a staggering 43,000 tenanted properties, approximately the same size as Rugby! 

As part of the transaction, which was announced on the London Stock Exchange on Friday 31^st October, Martin & Co will in future be offering ‘whole of market’ mortgage advice through an agreement with Legal & General.

Martin and Co, Weymouth Franchise owner had this to say “It’s great to be part of a success story. Earlier this year we surveyed our landlord clients and 94% said they would be happy to recommend our service. Now we are adding another 89 offices to the Martin & Co Group, you could say that even other lettings and estate agents want to get in on the act”.

Martin and Co Weymouth  01305 775504         philip.wakefield@martinco.com

EARN £20,000.00 per year

 A couple came into the office the other day talking about buying to let and how much money you needed!  After a bit of investigation it transpired that they were soon to complete on a family house upcountry and had £300,000.00 to invest.  We could buy one house as a  buy to let it was suggested!

Was this going to be a significant part of their income I asked?   Apparently yes! How could you maximise your return then.

Scenario 1      Buy a property for £300k and let it out.  Rental return £1000 per month.  Return on investment  4%  or £12000 per year

Scenario 2      Buy four buy to lets at £150k each with a 50% to 60% mortgage on each.  (The best mortgage rates are on loans less than 60% LTV

Each lets for £700 per month with mortgage costs of £200 per month at 3%

Total income would be 33600.00 less mortgage costs of £6750 leaves a profit of £26850 or 8.95% Assume agents costs, insurance and maintenance leaves a net profit in excess of £20k per year which is still 6.6% .   Find a good agent and forget about it!

This is called leveraging or ‘using opm’ (other peoples money) and can provide a way to produce an income far and away in excess of what you could expect using all your own money.   Landlords in this country have been doing this for years and many have become very successful with this strategy.

If you have ideas for property investment and would like a second opinion please stop by for a chat- Martin and Co top of St Thomas Street, Weymouth or call us on 01305 775504

Philip Wakefield    Property File 7

Housing Benefit Tenants-A good thing?

Very often, ex Local Authority properties are quite sought after by investors due to higher returns and more reasonable purchase prices They are often in areas that attract Housing Benefit tenants.

We get asked by potential tenants if we have properties that will accept housing benefits on a daily basis.   These tenancies can work well, but it’s really important that the landlord understands in advance how these tenancies work, and what the pro’s and con’s are. I’ll go through these below.

What are the Advantages?

!

1.            The main point is that statistically housing benefit tenancies cause no more problems than private tenancies. They just work differently and need a relaxed landlord. 

2.            Housing Benefit tenancies last longer – if you’re claiming benefit and you want somewhere nice to live, the world is by no means your oyster! As such when tenants get somewhere nice, they tend to stay longer.

3.            In certain areas of town, a housing benefit tenant may be a safer bet than a private tenant – a single parent with children is always going to be entitled to funds, whereas a private tenant on low income and in / out of work, may struggle more to pay.

4.            More often than not, we can arrange to receive direct payment from the Local Authority, which mitigates the likelyhood of the tenant not paying.

What are the disadvantages?

There are a few here also. It's important you understand these in advance.

1.            Rent is paid in arrears, not in advance.

2.            Local Authorities make 13 rental payments a year instead of 12. You still get the same amount of rent annually, only in smaller chunks.

3.            Local Authority administration is pretty slow .  They do backpay though, so you'll get your money eventually. 

4.            Some tenants sometimes struggle to deal with issues that arise (such as their benefit entitlement being changed) and deal with this by ignoring it, or burying their head, rather than coming and telling you.

The secret to success here is understanding the above and managing it. If you get a reliable tenant, and a relaxed landlord, it can work really well and deliver a great yield for the landlord. If you get an unreliable tenant and an inflexible landlord, problems can ensue! Is this any different to renting privately?

As such there can be problems with accepting tenants in receipt of housing benefit. It’s not a market that suits everyone and if you’re the sort of landlords that treats their rental properties as extensions of their own home, it’s not the market for you. That said, you can pick up a cheap property in one of the less upmarket areas of town and rent it for good money. We have a number of landlords who operate successfully in this market and I have a couple of places myself that I let out to tenants in receipt of benefit.