Buy-to-Let high yield locations...

Bargain_Rzl

SE18 covers Woolwich, Plumstead and Shooter's Hill.

It IS a cheap postcode area (AFAIK the only cheaper London postcode is Thamesmead SE28, and that's with good reason!) and there are areas of SE18 that I would live in, either as an owner or a tenant. I would live in the Plumstead Common area, or in one of the modern developments around Shooter's Hill, or in one of the modern developments in Woolwich (in fact I did some speculative househunting in the area in 2002 before moving to my last address in DA16 which is the next postcode down the road). But to be perfectly honest, the sort of place you'll get for £100k is not going to be in any of those categories. I just did a search on Rightmove for 2-bed properties in SE18 for less than £120k and (except for the shared-ownership flats) they are all obviously ex-council, mainly in tower blocks.

Mrs_pbradley936

I just want to give a word of warning to anyone thinking of buying an ex-council flat. Unless you are the original purchaser, the rate for repairs and improvements to the block/estate is NOT CAPPED. Or to put in the other way if you are original purchaser there is a limit to what you would be expected to contribute and if you cannot afford to pay a lien is placed against the property for when it is sold.

We inherited a flat a few years ago in Bow (behind Abbott’s carpets in Roman Road for those who know the area) that was ex-council and the rent it brought in was fabulous and there was never a shortage of tenants. One of the main reasons for selling it was because of the threat of uncapped repairs/improvements.

nelly_2

If as some people have said there is only 4% yield in it, surely banging the money in the bank at 5% is a lot less agro?

Unless I missed something a bank account doesnt need yearly gas safety tests, a re-roof, new boiler, arguments over rent etc etc

lypsey

Lynzpower

You advised renting in E6 , well i did some investigating on Rightmove

In Alabatross Close E6 you can buy a 1 bed flat for 160k and rent it for 850 giving a yield of 6.4%

In Northumberland Rd you can buy a 1 bed for 145k and rent it for 758 giving a yield of 6.3%

In my humble opinion what is the point. Put you money in ING bank at 6% and wake up every day with a smile on your face

If you were to rent you may have a couple of months void every year so you will not get the yield above , don't forget you have insurance , breakages , general upkeep , compulsory gas checks , EA fees of 10%ish , I also notice that there are loads and loads of places to rent in that area so it may be oversaturated .
Last but not least despite the fact the Halifax , Nationwide etc says house prices are rising means nothing at all. If you take a look at the land registry
http://uk.biz.yahoo.com/070208/323/gyhrc.html

They say that the last quarter was DOWN 2.6% in London and I know which set of figures I believe. If the LR continues to show this for the next 4 quarters you may have lost 10.4% before you know it

Also don't forget that the Council of Mortgage Lenders said that December had the lowest recorded month for loan approvals since 2001 so I presume that the market is slowing

I defy anyone in the SE or SW do give you a postcode where it is worth renting as previuos posters have advised - "you have missed the boat"

Alan_M_2

That would seem the obvious thing to do, however people are still assuming there will be large capital increases in the values of these BTL's in year to come. After all that's what's made the BTL market what it is today.

The thinking goes like this.......It doesn't matter if I make no rental yield at all as in 10 years time my £150,000 property will be worth £300,000, therefore as long as I can afford to make up the shortfall in monthly payment I make £150,000 for sitting on my backside.

Obviously there are wider ramifications - some people choose to consider them some don't, at the end of the day you've got to leave them to it as it's their money (or their loan) to do with what they wish. The lenders are only interested in making money, they aren't interested in whether you make money or not.

tonydee

Lypsey, thats all very well if you had the bulk of the money to save in ING @ 6%.

Most BTL investors wil have the deposit and mortgage the rest which if things go well is paid for by the person renting.

p.s missing the boat - yes if you're only in for the short term but I would say a no if like most you're in for the long haul.

nelly_2

Theres something else at work here too.

on a mortgage you pay back 2 or 3 times what you borrow, this must land in the equation somewhere???

lypsey

Tonydee
http://www.in2perspective.com/nr/stats/uk-annual-house-price-inflation-odpm-.jsp
Tony , if you are any kind of an investor you do not buy something now that you believe to be 10/20 or 40% lower in the near term .... do you??

tonydee

My point is that historically the housing market has been a very sound investment indeed and I see no reason why this should change anytime soon.

We digress, back on to high yield locations.

master_ian

Alan M - has just nailed it about BTLs main motivation being the capital gain. I would put our deposit into a high interest savings a/c otherwise if you just want 6%. However, as someone looking at BTL as a long-term investment - the chances are in your favour that the property will be worth more in 5, 10, 15 years time. I would settle for that 5 -6% guranteed let to the council renting to DSS. It depends on what you want out of it and what risk you're willing to take as well.

The trick is finding th right AREA that has potential for this growth within ones budget. it's back to LOCATION again.