Bexleyheath or Erith? Different investment strategies.

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Last week, one of our local landlords, who owns a small property portfolio, popped into our office on Bexley High Street for some advice as to where he should buy his next Buy to Let property. He already owns properties in Bexleyheath and Erith.

In Bexleyheath, the average property price is around £332,500 and the average rent is around £1,360 per month. In Erith, the price of the average property is £255,630 and average rent is £1,080 per month. The annual yield in Bexleyheath is around 4.9% per year, and similarly, in Erith, he could achieve an annual yield of around 5.0%.

We know the yields are very similar, so what should be considered next? I asked him what his long term goal was and he was very clear that he wanted to keep on building his portfolio of properties and buy a maximum number of units before retirement.

I then asked what was more important to him, capital growth or rental yields? He explained that he had no plans to sell the properties but to have a healthy yield that he could retire on and enjoy as a pension.

Understanding his situation, I explained that out of the two areas we considered, Erith suited his goals best. If an investor is looking to finance his purchase with a 75% Buy to Let mortgage then he or she could be looking at putting down nearly an extra £20,000 as a deposit on a similar property in Bexleyheath. After buying three properties in Erith, the total deposit money saved is enough to put down as a deposit on a fourth property.

What would that do for his yield? With four properties in Erith rather than three in Bexleyheath not only will he have increased the number of units owned but he could also be earning nearly 6% more in rental income.

Although this plan suited this individual Landlord, others would plan their investment strategies differently. Had his goals been to achieve maximum capital growth, then in the last 20 years Bexleyheath’s average house price has increased by nearly £250,000 whereas Erith’s increase has been around 25% less.

It goes to show that our Borough of Bexley can be a good area for property investment suited to differing goals, but it is a decision that shouldn't be taken lightly. These are only averages, so the yields for some small to medium sized properties in popular areas of Bexleyheath could be higher.

If you would like some advice on investing in property in the Bexley Borough, then please feel free to come into our office.

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