Buy-to-Let high yield locations...

master_ian

FTB and sister are hitting the crunch time now - next week we'll be seeing a mortgage broker for a deal for a BTL flat/house as an investment for our future/pension.

Firstly THANKS to everyone for their advice so far - Lynzpower, Doozergirl, Alan M, Silvercar, amongst others...when I started queries on this forum my plan was: New-Build BTL in London. Now, after some research and lots of feedback here, it's morphed into: Second-hand BTL (possibly on local council guaranteed scheme) in under-average priced/upcoming London area. however, just want to explore and pick your brains about BTL in towns outside of London - ex. Sheffield, Leeds, Nottingham, Gloucester - lots going for them and big university towns. Also much more affordable than London with bouyant rental markets. Ideally, I'm looking for at least 7% yield.
I might settle for the council let scheme if all goes well - at least I won't have to worry about void periods, and they insure as well. Just wanted some views on the 'towns' option?

Cheers as always! :beer:

Alan_M_2

To be honest you've probably missed the boat, I'm in Surrey, absolutely no hope of 7% around here, it's about half that right now.

My parents live in Dereham, Norfolk, certainly not a commuter town (well not using public transport anyhow). Rental yield on their (3 year old) 3 bed semi would currently yield between 4%-4.5% gross.

Other than those areas I have no personal knowledge.

A little anecdotal, but real all the same.

lynzpower

Personally, I think you cant go wrong with London. I say this as
a) the rental market is HUGE with massive turnover of tenants/ applicants, people coming and going in london year round- people ALWAYS looking for somewhere to live
b) if you live in london, you can keep an eye on your investment much more closely. New furnishings etc, can be organised easily as opposed to if you bought say in gloucester youd have to either a) trust your managing agent to buy the right things at the right price or whatever.


I think from a hassle POV London would work for you

Whats your budget agian?

MJMum

Crawley. Massive BTL market, split 2 ways (a) Gatwick Airport \ Industrial Estate on the doorstep - you can buy in the cheaper areas of town (b) mainline service into London from Three Bridges station - "executive lets" in Three Bridges\Pound Hill\Maidenbower. Option (a) is a good long-term punt too, as there are plans to build a university in either Crawley or Horsham, and if Crawley gets it, it will be on the side of town which is typical "airport worker" territory.

Lots of new build development there though; you may have missed the boat.

mystic_trev

I bought in Horhsam 10 years ago. It's beena great Investment, although original yields of more than 10% gross are now around 4% So buying now, the figures wouldn't "stack up"

master_ian

Hey Lynz...thought you'd drop in.

Our budget is £180K max for a 2 bed - with a 20K deposit - we're below usual 15% needed for BTL. However, there are lenders now allowing for 10%, although I do realise we'll be paying higher IR. Another option is being straight with a lender and going residential first then switching to BTL after the purchase - finding a lender who will allow for that.

Ideas on good rental areas in East London/any part of London for that matter?
In this for the long run so although we may not be getting the yields of 10 years ago, a bargain purchase in a good area will I believe produce good capital growth.

Just read that houses give higher yields than flats...Comments?

lynzpower

Im not sure why houses would yeild more than flats in all fairness- surely the cheaper the property is, the higher the yeild will be in proportion to the rent?

Your lucky Ian! I have only caught up with my MSE time today this estate agency lark is hard graft

clutton_2

are you enjoying it Lynz ?

lynzpower

OMG Im loving it! BUt jeeeeeeeez SO unbelievably busy. I have never been this busy in my life.

Anyone saying the market is flattening in my spot of the world in South London has not set foot in our office. Manic isnt the word.

Alan_M_2

Work it backwards, 7% yield on £180,000 you need to buy a preoperty that will rent for £1,050-£1,100 a month.

Now look on the rental lists, see what properties are generating that amount of rental income, then look how much it would cost to buy a similar property in a similar area.

master_ian

Apparently houses are more flexible, and can accommodate young families, students, and sharers better than the average flat. Just a report I read.

The budget can only afford a flat anyway!