Monopoly in Bexley Borough...
How would you play?
I was having a discussion with some local landlords about the property market in Bexley Borough, when the subject of 'risk against returns' arose. One of the landlords has a vast portfolio consisting of some houses of multiple occupancy and properties that he has converted into multiple units.
Everyone plays the property game differently. Some landlords will accept a modest yield/ return on their investment but are not prepared to compromise the quality of tenant. Others are more interested in high returns and are willing to take a risk with regards to the quality of tenant.
Before you start playing, it is advisable to have a game plan. For a low risk investment, there are properties in areas of Bexley that are perceived to be more desirable - such as The Old Mill development or on Thanet Road - where you may achieve an annual yield of around 4-6%.
At the other end of the scale, you have flats in the Frobisher Road development in Erith, where you are likely to be rewarded with a higher annual yield of 6-7%, but these come with the risk of void periods or a more varied quality of tenant.
If you are looking for annual returns of 8% and above, you could consider the more higher risk 'houses of multiple occupancy' (HMO's) or properties that may be converted into separate flats (subject to planning permission, of course). Although HMO's command a decent return (calculated at 9%), profits are falling and they were recently piped to the post on the profit league table by landlords buying single blocks of flats or converting buildings and warehouses into apartments. This larger scale investment generated a greater gross profit between October and December 2014, according to figures released by Mortgages For Business, a specialist buy-to-let mortgage broker.
So although the old saying goes that "he who dares wins", it seems that, in the current market, you don't have to take too much of a risk to still be a winner.
If you would like any advice on choosing properties, come and see us at our office or email us.
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