Need advice, preferably from the people of Nottingham. (planning to buy an apartment)

Grizebeck

CSI_Yorkshire said:

Mihail_Lazarev said:

MultiFuelBurner said:

What research have you done in Nottingham? What rent could you achieve for your £80k purchase? And have you done any research on what it takes to become a landlord with the costs and tax involved?

Plus, a thousand other questions 

  One of the apartments located NG7 6AV (this is the postcode of the neighboring tram stop).  A few more options are approximately in the same place or at the same distance from the center of Nottingham.

Hyson Green?  Oof.

Could be worse I suppose - it could be St Ann's.

Yep I wouldn't live there ...

Mihail_Lazarev

jj_43 said:

the whole plan sounds like a mistake. basic financials: 200£ per month from 80k is 3%! you could put that 80k risk free/no effort in a savings account for 4+%. The yield is way too low, in Nottingham you should be looking for 8-10% yield. That area has limited/no growth prospects, rents/property value will follow minimum wage, which at the moment is quite good 10%! Your actively accepting no or limited income but unaware of the zero capital growth in this area, usually most trade off yield for growth, or growth for yield, your trading off returns. And you have no property experience? why should a tenant put up with another wannabe landlord?

Thank you very much for your answers. Apparently, I will consider another way to invest money. But something in your answers is not clear to me, could you clarify please:

1. You are talking about zero capital growth in this area. However, from year to year, real estate in Nottingham is steadily growing in price. As in all of England. As I understand, you will no longer buy an apartment at the prices that were 2 or 3 years ago.

2. Here is the logic of my plan. According to GOV.UK, we have inflation of 7.8% (it feels like more than 10%).

Option A - We have 80,000£. Putting into a savings account to reduce inflation +4%.

 The result is 7.8% - 4% = 3.8% loss, which is about minus 3,000 £ per year.

Option B - We have 80,000£. We buy real estate, the price of which grows along with inflation + 7.8% per year, which is equivalent to 6,400 £ per year. Plus potential rental income.

Even if the apartment will be empty, the fact that I do not lose 7.8% of 80,000 should compensate for all losses.

CSI_Yorkshire

Mihail_Lazarev said:

jj_43 said:

the whole plan sounds like a mistake. basic financials: 200£ per month from 80k is 3%! you could put that 80k risk free/no effort in a savings account for 4+%. The yield is way too low, in Nottingham you should be looking for 8-10% yield. That area has limited/no growth prospects, rents/property value will follow minimum wage, which at the moment is quite good 10%! Your actively accepting no or limited income but unaware of the zero capital growth in this area, usually most trade off yield for growth, or growth for yield, your trading off returns. And you have no property experience? why should a tenant put up with another wannabe landlord?

1. You are talking about zero capital growth in this area. However, from year to year, real estate in Nottingham is steadily growing in price. As in all of England. As I understand, you will no longer buy an apartment at the prices that were 2 or 3 years ago.

If you are considering investing your entire net worth into property, I suggest that you track what is happening in the property market a little more closely.  The situation can be summarised as anything but "steadily growing in price".

From the latest Halifax House Price Index report:

"Existing properties, which were instrumental in driving prices up during the pandemic related housing rush, were down by -3.5% year-on-year in June. That was the steepest decline since August 2009."

"Prices fell on an annual basis in June across all property types led by flats (-3.1%) and terraced homes (-2.5%)"

"Average house prices are now falling on an annual basis in most parts of the UK, with the only exceptions being the West Midlands (+1.5%, average house price of £251,139), along with marginal gains in Yorkshire & Humberside (+0.2%, £203,674) and Northern Ireland (+0.2%, £186,856)."

Mihail_Lazarev said:

jj_43 said:

the whole plan sounds like a mistake. basic financials: 200£ per month from 80k is 3%! you could put that 80k risk free/no effort in a savings account for 4+%. The yield is way too low, in Nottingham you should be looking for 8-10% yield. That area has limited/no growth prospects, rents/property value will follow minimum wage, which at the moment is quite good 10%! Your actively accepting no or limited income but unaware of the zero capital growth in this area, usually most trade off yield for growth, or growth for yield, your trading off returns. And you have no property experience? why should a tenant put up with another wannabe landlord?

Option B - We have 80,000£. We buy real estate, the price of which grows along with inflation + 7.8% per year, which is equivalent to 6,400 £ per year. Plus potential rental income.

Why would the price of a specific flat in Nottingham track inflation?  That is a massive assumption to be making. 

Grizebeck

And why would you buy in the dump that is hyson green

silvercar

Rooms in shared houses in that location go for £300-£400 depending on size, facilities en-suite etc, I would have expected a one bed flat to fetch more. I also think it’s an area that won’t see much capital growth due to the area’s reputation. I would expect turnover to be high, so budget for frequent gaps between rentals.

Grumpelstiltskin

With your option B you don't appear to have factored in costs.

Option B - We have 80,000£. We buy real estate, the price of which grows along with inflation + 7.8% per year, which is equivalent to 6,400 £ per year. Plus potential rental income.

Even if the apartment will be empty, the fact that I do not lose 7.8% of 80,000 should compensate for all losses.



Even if it's empty you need to pay insurance and council tax plus any repairs etc. between possible lets and you are assuming your tenants will pay their rent all this on top of letting agents fees as you appear to live too far away to handle it yourself.

You asked for opinions, you got them - flats in an area such as Hyson Green are cheap for a reason, they are not for the inexperienced.

I'll give you another option, look at the price of 1 bedroom flats in West Bridgford, a much better area of Nottingham, you will see the difference.

JayRitchie

Grumpelstiltskin said:

You asked for opinions, you got them - flats in an area such as Hyson Green are cheap for a reason, they are not for the inexperienced.

I'll give you another option, look at the price of 1 bedroom flats in West Bridgford, a much better area of Nottingham, you will see the difference.

Hi

I've been considering something similar to the OP but with a slightly higher budget. Any other areas of Nottingham you think it would be worth visiting to look around with an eye to possibly living there in the future?

CSI_Yorkshire

JayRitchie said:

Grumpelstiltskin said:

You asked for opinions, you got them - flats in an area such as Hyson Green are cheap for a reason, they are not for the inexperienced.

I'll give you another option, look at the price of 1 bedroom flats in West Bridgford, a much better area of Nottingham, you will see the difference.

Hi

I've been considering something similar to the OP but with a slightly higher budget. Any other areas of Nottingham you think it would be worth visiting to look around with an eye to possibly living there in the future?

West Bridgford, Beeston/Bramcote, Woolaton, The Park.

Clifton Village but not Clifton.

Grumpelstiltskin

Article in todays paper.

Nottingham: New licensing scheme announced for private landlords | West Bridgford Wire

More expense

Grumpelstiltskin

JayRitchie said:

Grumpelstiltskin said:

You asked for opinions, you got them - flats in an area such as Hyson Green are cheap for a reason, they are not for the inexperienced.

I'll give you another option, look at the price of 1 bedroom flats in West Bridgford, a much better area of Nottingham, you will see the difference.

Hi

I've been considering something similar to the OP but with a slightly higher budget. Any other areas of Nottingham you think it would be worth visiting to look around with an eye to possibly living there in the future?

You need to think carefully, if you are thinking of working in the city centre and driving in then forget it.

Places on the Tram line can be OK ( apart from Hyson Green Radford etc. ) if you are happy to travel by tram.