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. 

How much!!!

We often get asked for average rental prices in the Weymouth area compared to Portland and Dorchester.  This is probably best illustrated in a table form which I have attempted below.  These are obviously ball park figures and you can add for property in exceptional condition, in a unique position or subtract for those in a tired condition or poorly located etc.

	Weymouth	Portland	Dorchester
1 Bed Flat	500	450	550
2 bed flat	650	600	675
2 bed house	725	650	750
3 Bed House	825	725	875 All in £’s per calendar month

Just because those in Dorchester are higher and those in Portland lower does not mean that Dorchester is a better bet for your investment.  Purchase prices on Portland are lower as well so your return can often be better there than in the County town.  It is also very important to take into account how quickly it might be to sell.  Some properties on Portland can take a while to sell and Flats and Apartments are in plentiful supply over the whole area and can also stick.  Semi-detached houses in Weymouth however are always in demand and find new buyers comparatively quickly provided they are well priced.

Rental prices are reasonably stable at the moment.  Good quality, nice condition property will rent quickly to (usually) responsible tenants and the converse can also be true.

It all comes down to doing your homework, asking questions of the agent and the owners. Find out their motivation for selling and see if you can ‘bag that bargain’. Trust me, they are still out there. As we are estate agents as well, I can look at the whole of the market and give you an honest opinion on the investment potential of any property up with any agent. If I see a deal that I think is a good investment I will put it on my blog at http://macweymouth.blogspot.co.uk/

If you have a specific investment in mind and would like someone to offer an opinion please come in to our office at any time and we would be delighted to talk to you.

Philip Wakefield 09/10/2014

5

Is now the time to buy on Poundbury?

Property on Poundbury lets for appreciably more than property in other parts of Dorchester and therefore  attracts landlord's looking for  property investment.

Rental return is not the only consideration and capital growth is also equally important over the long term.   2 Bed apartments in Middlemarsh Street cost, on average £147k in 1999 as newbuilds. In 2013/14 the average price achieved was £148k!   However, overall returns on these apartments are around the 6 % mark – a reasonable  return.  Of course this is not to say that prices here will not rise more in line with other areas from now and of course may even exceed national averages meaning that you will get that capital growth.

Looking at 3 bed terraced property the average asking price is around £300,000 which would rent for £900 showing a return of 3.5%-not so good when you take into account your costs. I would imagine that there is still some levelling out to happen here.  The number one rule of good investing applies here as anywhere.  Do not overpay as you will spend years waiting for the value of your property to fall back into line with others in the area as they appreciate.

It could still be a good area to invest for the small investor though. The properties are modern and people like to live here.

On another tack altogether Martin and Co are launching brand new insurance offerings for Landlords and Tenants.  These include Buildings cover for empty properties and a stunning rent guarantee product that is amazing value and delivers the benefits.  Speak to us to find out more as there are some great financial incentives for Landlords as well.

Philip Wakefield  Property File

Martin and Co   01305 775504

Property File                       

Last Friday a Landlord called me to say that she loved the article in the paper but it wasn’t clear who had written it so I have tried to redress that this week.    All articles are on my blog so please go to macweymouth.blogspot.co.uk if you are interested. 

In this column it is my intention to discuss property issues in the Weymouth, Dorchester and Portland areas on a weekly basis that I believe will be of interest to investors, landlords and house purchasers.

Today I am going to look at buying two different types of semi detached property in two different areas in Weymouth, the first area is around Corporation Road just off Abbotsbury Road and the second on the other side specifically Knightsdale Road.  Both roads are popular with tenants and a house on Corporation will let for £775 to £800 and Knightsdale £825 to £850.

An important part of any property  investment is balancing the capital growth with the rental income so looking at our two examples our ex local authority house in Corporation Road will return 5.5% on a purchase price of £175k whereas our property in Knightsdale Road costing £210k  will return 4.5% nearly 20% less.

Capital growth wise, over the last 14 years both houses have risen in price by around £145 per week. The sensible money would therefore appear to be on a property in Corporation Road or in its immediate vicinity.  

If you have a particular property in mind please come and see me to discuss your investment!

 Philip Wakefield                               Martin and Co

                                                              01305 775504

Is a one or two bed buy-to-let the best investment?

 Ok so you’ve decided to take the plunge, become a landlord and invest your savings in a buy to let apartment or flat in Weymouth in order to boost your income and try to build in a little capital growth.  What are the things to look out for when starting this search?

We had a similar brief a while ago from an investor who came into the office and this is the results of the research we did for him.

The average price for a one bed flat locally is around £80,000 and it would typically rent for £450 which gives a return of 6.75%

A two bed’s average rent is around £625 and costs on average £130000  giving you a return of 5.7% some 16% lower.   Capital appreciation over the long term is likely to be similar on both.  We have a healthy demand for both one bed and two beds so there is unlikely to be an advantage to owning either one or the other for letability.

As flats are leasehold consideration must be given to the management of the block.   If it is a large block managed by a professional management company the maintenance and fees can easily come to the equivalent of two months’ rent over a year, however if you are buying a flat in a converted house there is often little organised maintenance and it is done on a ‘just in time’ basis with the bills being shared by the leaseholders.   A purpose built flat with a professional management company will cost more to buy and run but the rent achieved can be up to £100 more per month.  It is important to factor in all these costs when doing your sums!

Comparing also two bed houses which have no expensive management fees to pay, cost on average in Weymouth in the region of £140,000 to £160,000 and will rent for £750 if they are nice. There is a constant good demand from potential tenants and the return here is up to 6.4%. with all the advantages of a freehold over a leasehold for you the owner.

If you are looking in Weymouth or Dorchester to make an investment such as this please pop into our office’s at 2 St Thomas Street, Weymouth for a chat when you are passing.

APW

The 5 do's of property investment

I've been meaning to write this article for quite  a while! Experience in the letting game is hard won but as a professional letting agent with some personal experience as well I feel at least a little qualified to offer the following opinions.   

In that time, I've seen loads of landlords buy loads of different properties. Some (in my view) have bought well. Others have bought less well (or to be precise been "sold something"). I've invested myself and have certainly bought things towards the start that I now regret - being within the industry has changed my perspective on what constitutes a good purchase! 

So what type of landlord seems to do well?

Do not overpay.

Property is an investment, so if you overpay at the start, you're forever playing catch up in terms of trying to make that investment work. Some buyers are happy to pay the market rate for a genuinely nice property. Others seek dilapidated properties at reduced prices and generally get good deals even though works are required. Either is fine, but what you want to avoid is paying good money for a property that's actually pretty average - and that's 80% of the market!

Do have your business head on

What I'm saying here is that those who become a landlord accidentally struggle to make it work for them. If the house you're renting out was once 'home', there's always going to be an opportunity to feel 'the lawn wasn't like that when I lived there' or 'there are some scratches on that wall I took ages painting'. If you rent out a place you've never lived in, anything the tenant does isn't as personal.

Do maintain your property(s)

It's important that any property is kept up to date. If you spend nothing on it, over a few years it will become dilapidated which affects the value of your investment. Equally if you don't repair things quickly, decent tenants will get fed up with you and leave. Your property will churn more frequently and your tenant quality will drop too. You're now in a downward spiral which will cost you far more in the long run than keeping your property in good repair.

Do not 'fiddle'.

No I am not talking about money here. Good tenants want the 'peaceful enjoyment' of their property and invariably get frustrated by landlords who are overly  attentive. We manage one property where I know the landlady (who's a really well meaning lady) has lost 3 tenants in the last few years because they feel like they are being 'supervised' - a property inspection on a 2 bed flat does not take 30 minutes and involve quizzing the tenants on their personal sleeping arrangements(!)

Do not become greedy.

You would be surprised how many landlords are OBSESSED with the amount of rent they are receiving. You can legally raise a rent every 12 months and this is the only date some landlords diarise - irrespective of whether the rental market or the state of the property justifies an increase - every year they force through a rental increase even if it's just a fiver. When you have a good tenant who looks after the property and is paying a decent rent anyway, this is a complete false economy as all it does is antagonise the tenant. It's the same with landlords who have got £x for a property previously and will dig their heels in until they get £x again - they fail to understand that you maximise your income by killing void periods and the costs associated with a change of tenant. If a good tenant comes along far better to take £10 less per month than lose a whole months rent in a void. Conversely landlords whose end of year figures look the best are those who've set a sensible rent to start off with, and once they have a decent tenant don't rock the boat.

House Investment Alert Alert Alert!!!!!!!!!!!!

House Investment Alert Alert Alert!!!!!!!!!!!!

Absolute cracker of an investment.

Go to http://www.rightmove.co.uk/property-for-sale/property-43929223.html

Three bed terrace in Clayton Close with two double bedrooms and a single, garden plus views for £130,000   This will rent quickly at £750.00 per month returning 6.9%  I am not sure why this has been missed  but it surely is an opportunity for someone!

Where London leads provincial towns follow!!

This is more than seasonal, says Hometrack, as housing market growth slows

Written by: ROSALIND RENSHAW | JULY 25, 2014

Print

The pace of house price growth has slowed to the weakest in 18 months – and the London market is cooling “rapidly” and “dramatically”.

Reporting this morning, Hometrack said that weakening demand and a slowing in property price inflation are “more than just a seasonal slowdown”.

It said that tougher lending rules and changing buyer sentiment have both had an impact on demand.

In London, Hometrack says that 11% of areas are now registering price falls, while only 12% of London postcodes registered price gains in July.

Reporting for July, Hometrack says that house prices nationally crept up just 0.1% – compared with 0.3% in June and 0.5% in May.

The number of new applicants fell by 0.9% and sales agreed dipped very slightly by 0.3%.

The proportion of the asking price being achieved is also starting to decline nationally, as agents “find it hard to push prices ahead in the face of weaker demand”.

Richard Donnell, director of research at Hometrack, said: “Seasonal factors always lead to a slowdown in demand and market activity in the summer months, but it is clear that there are bigger forces at work with a pronounced loss of momentum in the London housing market in the last three months.

“The lead indicators in the survey have pointed to a slowdown in the rate of growth for the last two months, in part due to warnings from the Bank of England and others of a possible house price bubble.

“Demand for mortgages has also been slowing for several months now. There’s a growing element of caution from buyers about the market outlook as the prospect of future interest rate rises looms, and the new tougher mortgage market checks implemented as part of the Mortgage Market Review (MMR) impact on demand.

“The housing market has tended to move in ‘mini cycles’ over the last few years, each spanning 18-24 months, largely on the back of changing buyer sentiment.

“Overall market conditions have been strong since early 2013, as a result of pent-up demand returning to the market outside London and with buyers encouraged by low mortgage rates and Help to Buy, but it now appears that market sentiment is starting to change.”

He went on: “This is the first time in four years that London, which has long been the engine of the housing market, has a smaller proportion of markets registering price gains than in the regions.

“House price growth across the rest of the country, where price rises have been far less pronounced in recent years, could well be sustained into the autumn.

“While seasonal factors have impacted the level of price growth in the regions outside London, there is a slowing in the rate of growth but no evidence of any price falls.”

Flats or Houses best to rent?

In the office the other day we  were discussing the relative merits of buying flats as investments and where to buy them.

 

 Many people who aspire to become buy to let landlords start off with flats because basically they cost less!   Then low and behold a chap came into the office and asked for advice on where to buy a buy to let flat in Weymouth and was it the best type of property to buy as he had limited funds and wanted to maximise his returns.

After the usual introductions and the offer of a cup of tea we got down to some serious discussion and RESEARCH!   The general accepted opinion is that flats offer greater yields but less capital growth than houses and flats in cheaper areas offer higher yields again. 

We picked a popular area to rent in Weymouth quite close  together and well known to any local, Wyke Road and Rodwell Road.   Average prices for two bed flats in Wyke Road are at around 142k and looking back to 2001 wereselling at that time for around 50k which points to a respectable increase of 65%.   (Detached houses on the same road show only 51%)

When we turned our attention to Rodwell Road average prices are higher at 169K but in 2001 you would have parted with 95K to buy showing only a 43% rise over the period. 

Rental values are not much different with a relative new build returning £700 and a converted older flat showing £625 to 650.   Comparable yields therefore for a  typical older 2 bed flat are 5.28% on Wyke Road and 4.43% on Rodwell Road which is some 19% more!   Bearing in mind that the cost of purchasing in Wyke Road is significantly less and it may show greater capital growth in the future the figures would seem to suggest that a flat in Wyke Road would be the better investment.

If you have such a dilemma and would like to talk it over please pop in to our offices and I would be pleased to discuss your options with you.  Our gentleman has gone off flat hunting and we have been delighted to comment on his various ‘finds’ with regards to yieds and growth as we build a short list with him.

What properties sell the best in South Dorset?

Knowing how saleable a property is half the battle when deciding what (or not) to buy for your next property investment. Why? Well because one day, you may need to sell that property. If you go into the purchase with open eyes, you know most of the risks and can barter the price accordingly if you have to.

Bearing this in mind, last week, a couple from Portland popped into our offices to ask about investing in property. Their concern was if we have another property slump (and we will because that is what has happened to the British property market ever since the 1950’s), if they did need to sell, what type of property would be easier to sell. Now, everything sells, even during a slump, but I did some research and followed up their query – I was actually quite surprised with the results.

A good guide to judge the saleability of property is the number of properties for sale, compared to the numbers that are sold, subject to contract. Now I carried out this comparison last week, so the numbers will be marginally different today, but in Weymouth in the DT4 postcode, there are 714 properties on the market for sale. Of those, 465 are fully available on the open market waiting for a buyer and 249 have buyers and are sold subject to contract. That means 34.9% of property on the market has a buyer in Weymouth.

However, delve deeper, and in Weymouth today, 42.5% of detached houses on the market have a buyer, great news for semi owners as  have 59.3% have buyers. Terraced  houses have 40.4% sold, with  62 of the 153 on the market having buyers .  The properties  that appear to be sticking though are apartments – only 69 of 253 on the market have buyers, a very low 27.5%. Leaving the best to last, and  it’s the bungalows that surprised me, over 46.3% of them having a buyer.

I am always giving advice to my existing and new landlords in Weymouth on what to buy (or not as the case may be).  You see, I have always thought the right bungalow in the right location could be a different buy to let investment and they always let very well and quickly? 

Having this detail of information at my finger tips, allows me to spot trends in the local market, which then enables to me to give the very best advice to my clients. I don't charge for that advice as I have plenty of opportunity to earn money by finding the best tenants for my landlords in the years to come on the investments I have advised on.   

Final thought though, before I go, in the Portland DT5 property market, only 33%% of  properties on the market have a buyer .. that is over a fifth less than Weymouth!

Buy to let flats or houses?

In the office the other day we  were discussing the relative merits of buying flats as investments and where to buy them. 

Many people who aspire to become buy to let landlords start off with flats because basically they cost less!   And then whilst I was in full flow to the girls in the office (they have to put up with a lot!) , low and behold a chap came into the office and asked for advice on where to buy a ‘buy to let’ flat in Weymouth and was it the best type of property to buy as he had limited funds and wanted to maximise his returns.

After the usual introductions and the offer of a cup of tea we got down to some serious discussion and RESEARCH!   The generally accepted opinion is that flats offer greater yields but less capital growth than houses and flats in cheaper areas offer higher yields again. 

We picked two popular areas to rent in Weymouth quite close  together and well known to any local, Wyke Road and Rodwell Road.   Average prices for two bed flats in Wyke Road are at around 142k and looking back to 2001 were selling at that time for around 50k which points to a respectable increase of 65%.   (Detached houses on the same road show only 51%)

When we turned our attention to Rodwell Road average prices are higher at 169K but in 2001 you would have parted with 95K to buy showing only a 43% rise over the period. 

Rental values are not much different with a relative new build returning £700 and a converted older flat showing £625 to 650.   Comparable yields therefore for a  typical older 2 bed flat are 5.28% on Wyke Road and 4.43% on Rodwell Road which is some 19% more!   Bearing in mind that the cost of purchasing in Wyke Road is significantly less and it may show greater capital growth in the future the figures would seem to suggest that a flat in Wyke Road would be the better investment.

If you have such a dilemma and would like to talk it over please pop in to our offices and I would be pleased to discuss your options with you.  Our gentleman has gone off flat hunting and we have been delighted to comment on his various ‘finds’ with regards to yieds and growth as we build a short list with him.

APW

Weymouth-Dorchester ... good time to buy property?

Following publication of the last newsletter, I had an interesting chat with a chap who lives in Weymouth who popped into our office whilst his better half was shopping  in town.

He is thinking of buying his first buy to let property and wanted my opinion on the state of the market and if it was a good time to invest.

He was particularly worried that with all the newspaper headlines of a booming house market, there wouldn’t be any demand from new tenants.

One of the best pieces of advice I can give to those looking to invest in property is a simple trick of the trade..  You can judge the affordability of an areas property market (and thus how much demand there could be) by simply finding the ratio of the average property price to the average salary.  The lower the ratio, the more affordable the property is.

When we put this to the test we found that Weymouth DT4, currently has an average property value of £211,800.00 for a three bed with the average salary being £21,237.  This is a ratio of 1 to 8.83.  

Meanwhile in  Dorchester the ratio of property values to salary is 1 to 9.74  with the average price for a three bed house £245,700.00.  

Both of these ratios are very fair, comparing with other parts of the UK and are what you would expect and also obviously make Dorchester more expensive to buy. Here you must refer to yields to decide! (more next month)  

However, the issue isn’t affordability, it’s the raising of the 5% deposit, which when you take into account fees and other costs, will be in the order of £15/20,000.00

Tenants inability to raise that sort of money for the deposit is driving demand for rental property something we see every day in this office.   If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market, please come and see me at our office on St Thomas Street Weymouth

Why a property can stick and not let

I have a landlord who owns a property on Portland which is ‘sticking’ and quite rightly she is getting rather concerned.  We have discussed this at great length, have reduced the price twice and persuaded her not to go to a different agent!

The property is well presented however, in an attractive location and has character features.  However it does have certain disadvantages and it is these of course why it is not letting.

Despite being only 50 metres from the beach, unfortunately it has no garden, on street parking 30 metres away and a downstairs bathroom which all serve to limit its appeal somewhat.

This led me to thinking what makes a good buy to let and it is often not what makes a property a good buy to make your home. Tenants often have different criteria they are looking for.  Once you have calculated the potential yield a let property will give up you need to look at the area and the facilities the house will need to offer a potential tenant.  Generally a house needs a garden and easy parking.  Character features probably don’t feature too highly in future tenant’s plans!

A flat probably won’t need a garden but it might be an advantage if it is close to a good bus route.  A smart flat will at the least allocated parking.

Schools are important if your target tenant is a family and maybe the proximity of the doctors’ clinic.  

Every town has a ‘nice, desirable area’ and a ‘not so desirable’ area.  What is an undesirable area to you is fine to some folk who even desire to live there because ‘their mum lives over the road’ or their ‘sister lives next door’.  These are real life examples of why tenants have taken particular houses that have other real disadvantages.

It’s all about putting yourself into the head of a potential tenant and seeing your property from their point of view.  What you see as excellent features are not always what a tenant might see and what you see as potential downsides could be positive advantages to them.

With regard to my Portland house it is definiantly in the category of a ‘niche property’. Portland is either where you must be or where you couldn't possibly live.  There seems no middle ground. One thing I am sure of is trhat there is a tenant out there somewhere and it will let.  Two viewings tomorrow……… 

This little  two  bed is on the market for £149,000 Expect to pay at least £145000.  It looks very tidy and would rent very quickly given its location.  Rental wise we are looking at £675 to £700 per calendar month so the yield would be 5.8%.  at £700 per month    An excellent rental proposition it can be seen at:

http://www.rightmove.co.uk/property-for-sale/property-29465352.html

Larkspur Close vs Kestrel View

Larkspur Close vs Kestrel View

I was talking to a couple who popped by the office yesterday who are looking at investment properties in the area.  They brought in details of two properties, a two bed in Kestrel View and the same in Larkspur Close and asked me my view on which would make the better investment.  Which would offer a better return/yield?  

Now both streets let well but I decided to do a little research to help them with their decision.

The average asking price on a property in Larkspur Close stands at £160,000 whilst on Kestrel View  it is currently  24% lower at £139,000.   To fully understand the investment opportunities available, I considered the average rents currently payable in each street.

Currently a two bed terrace house on Larkspur Close will rent for around £700 giving around 5.25% return whilst the same on Kestrel View will return around £650 showing around 5.41%- not a lot of difference.

However when we consider capital growth over the last 5 years the properties in Kestrel View have appreciated nearly 20% more than those  in Larkspur Close.  

So it comes down to that old chestnut, yield or capital growth!  Assuming both properties were in lettable  condition  I would suggest that you would be better investing your money in Kestrel View because although the yields are similar the capital growth is significantly greater and the original purchase price would be much less.

If you would like any more information on investing in Weymouth’s property market please call me on 01305 775504 or visit our office at the top of St Thomas Street.

Buy to let opportunity in Weymouth

This little  two  bed is on the market for offers on £150k but £150k might get it of course.  It looks very tidy and would rent very quickly given its location.  Rental wise we are looking at £700 per calendar month so the yield would be 5.6%.  

An excellent rental proposition it can be seen at

http://www.zoopla.co.uk/for-sale/details/32844807

Property values rise by £139 per week in Weymout

Last week a Landlord who lives in Dorchester came into our office to discuss rising property values in our part of Dorset.  He owns a varied portfolio of rental properties in Weymouth and Dorchester.  He thought that Weymouth prices were beginning to move.  What I discovered surprised him and I must say myself.

Over the last two years in Weymouth average property prices have risen by £139 per week  but over the last 12 months that increase has been only £44 per week meaning that the growth has slowed considerably over the last 12 months.   In Dorchester a similar scenario has played out - the overall growth over 2 years  has been £33 a week, significantly less!  However any rise in a towns average property values suggests that the market is recovering steadily – good news for home-owners and landlords alike.

When considering a landlords buy to let  portfolio yields can be in the order of 4-7% per year, depending on where you buy, so it is best to combine that with steady rental growth and good capital increases in the value of the properties themselves.    With prices’ locally bucking the national trend of galloping inflation but with some steady growth there already now could be the time to invest in the property market before prices start to rocket.   If you would like any advice about buying to let, whether you are an established landlord with a portfolio or someone thinking to put a toe in the water of the rental market please do pop into our office in Weymouth at the top of St Thomas street.

4 reasons why referencing a new tenant is vital

Good Afternoon                                                          

One of the most important things an agent will do for a landlord is to reference potential tenants.  Tenants fall into 2 different categories-dishonest and honest.   Professional referencing helps to sort one from the other.

As we go through life things happen that we cannot always control-if they are financial we get a bad credit file which can stay with us for many years.  When we need to move house either as a tenant or a buyer we need a good credit file in order to satisfy a potential landlord or lender.  In the letting business I come across all sorts of oddities. There was the case of the gentleman who had been through a bad divorce, taken help from the local benefits office fraudulently then moved area and then wondered why we wouldn’t let to him after we discovered he had a CCJ against him for £32000.00!

  That is an extreme case but we get many cases where people have had problems with mobile phone companies and similar and judgements against them for small amounts - often £100 or less.  The point is here that if they tell us that they have had a small problem in the past it is more  likely that we can take a lenient view of the tenant and let them a property (after discussing it with their potential landlord- all landlords are shown a copy of their future tenants referencing here at Martin and Co, Weymouth)   If that tenant denies the problem from the beginning we cannot get an accept under any circumstances.  This is typical of the ‘naïve’ tenant

An informed tenant will be honest and truthful right from the start and we will work with them in order to secure them a let.

Private landlords do not have easy access to referencing and are taking a big risk with their investment.  A previous landlord will probably send in a glowing report just to get rid of their problem tenant.  Tenants will often say they have brought their references with them.  How easy is it to produce a letter from a fake employer or landlord.  As a landlord you have to weigh up all these points and calculate the risk you are taking putting a poorly referenced tenant into your property.

We had a tenant recently whose previous landlord had gone awol.  No reference!  So we asked for his bank statements which showed his salary being regularly paid and his rent going out, it also showed the return of his deposit which when cross referenced with his previous tenancy showed that the complete deposit was returned – no deductions.  Meaning of course that he left the property in good condition! Together with his employers letter showing full employment we were able to prove to the new landlord that this tenant was a responsible reliable person.

So, the 4 reasons are

1 A credit check can find issues that may go back years (6) –if we know what they are we can take a judgement-it can also catch a tenant out.

2 A good reference proves affordability-do they earn enough? and do they spend more than they earn?

3 Employment is checked

4 If the reference is a little ‘sticky’ we can ask for a guarantor-most people will have a friend who will stand by them-if they haven’t you would have to ask yourself ‘why?’

One of the added advantages of having a tenant referenced through Martin and Co Weymouth is that we can offer all new  landlords a FREE 6 month rent guarantee on every let supported by acceptable references.  This is on the property and will remain in force even if the tenants change - if you decide to continue with it after the initial free 6 months  If the tenant don’t pay we will!

Philip Wakefield    01/05/2014

www.martincoweymouth.co.uk

Why do I want to buy this Buy to Let?

Good afternoon

I was chatting to a potential landlord  the other day and she was showing me some details of properties that she had selected as suitable for the start of her portfolio that she was intending to build.  They were nice houses!  Unfortunately she had not asked the  first question that any aspiring Landlord must ask-what is my goal in doing this?

To get a good return on my available capital she responded when I put it to her.   A very good answer you may say except that all the properties showed yields of less than 4%. (see last weeks article on how to calculate a simple yield)

Her response was complete surprise when I went on to Rightmove and picked several properties with basic yields of 6 to 7%.  We then went on to talk about types of property and what the yield could be and where the price of the property will eventually be so high and the rent proportionally low that the yield becomes negligible.

Generally speaking the yield on a one bedroom flat is highest and on a 4/5 bedroom house the lowest.  If a one bed flat costs £80,000 and returns £450 per month the yield is 6.75%.   If a 4 bed house returns £1100 per month and costs £300k the return would be 4.4%.  Quite a big difference! You have to know how to do the sums and you have to know what your aim is.   I was talking to another potential landlord just a second ago (its open house here!)   who wants to buy a property in Weymouth  to move into  in a couple of years time  and rent it out in the meantime.  Yield is not so important to them as securing the property they want now and covering the costs until they are ready to move in. 

We were able to steer them towards an area of Weymouth very popular with renters but also quiet and in walking distance of the beautiful Chesil Beach and the  Fleet.

We don’t have all the answers here at Martin and Co but we do have a wealth of local knowledge and we are willing and pleased to talk to anyone about property so please pop in anytime and we will be delighted to talk to you.

All the best      Philip Wakefield