NOW SOLD 8.5% yield. £60k already offered.

It's unusual for a factory conversion to appear on my list of decent buys - simply because these things always tend to attract a decent sale price irrespective of the housing market.
This one is an exception - a well presented studio unit in walking distance to the town centre - nicely finished and available at around £60k if you're quick. Note that an asking price offer of £60k has already been made (not by one of my landlords) within 24 hours of the property becoming viewable. It will rent for £450PCM, but to get that I need you to furnish the property (or let me furnish it!). This isn't a big job, as the place is tiny, but it will help you get the rental price you want. Alternatively, you could leave it unfurnished and rent it for £400PCM. Once done, you'll have a really stylish unit that will be very rentable.

Once furnished, a spend of around £3k is required to cover (decent) furniture and a few running repairs that have not been attended to by the previous owner. Purchasers should note that to get a return on this property, the furniture needs to 'fit the part' and attract a good quality tenant. As such this is not an opportunity to empty the garage and see what's been gathering dust for the last 10 years!

Are Rents On The Up?

If you read the weekend newspapers, pay attention to the property media, or live in London(!), you're probably used to hearing that rental prices are increasing. I get phone calls every now and then from landlords who have done just that, and want to know when their 15% rental increase is going to happen in Northampton or Rugby. 

One of the benefits of owning a franchise is that I get to hear what's happening elsewhere in the UK on an impartial basis - there are around 140 Belvoir's and we all feed into the 'Belvoir Rental Index' which tells us what's really going on! The main message coming out of this is that rental increases and decreases take place on a regional, not a national basis. I have colleagues in London who genuinely have seen rents rise 20% in recent years. I have other colleagues who, even in this market, have more properties than tenants, which holds prices down. And then there's the majority who, like myself, have seen some small rental increase, but not on the scale the media would have us believe. 

So what is happening in Rugby and Northampton with rental prices?

Rugby

The smaller of the 2 towns, it's easier to generalise about prices in Rugby. For the most part they are up - probably about 8-10% on 2 years ago. This applies pretty much across the town for all 1 - 3 bedroom properties that aren't falling to bits! It's good news for landlords.

The exception is larger properties - 4 and 5 bedrooms. There have been a lot of these built in Rugby in the last 10 years, and it's these properties that people can't sell (because of what they paid to buy) so they look to let them instead. The result is an oversupply of larger properties on the rental market and a subsequent reduction in rental prices - achieving over £1000PCM at the moment for any property built in the last 10 years would constitute a good day at the office. At the top end, I'd say rental prices have fallen by as much as 20%. 

Northampton

Being larger, the Northampton market is more complex. In terms of 1 and 2 bed properties, there has been little change, mainly due to a constant supply of available units due to large scale development in recent years. This particularly applies to apartments - price increases simply haven't happened despite the so called rental boom. At the top end of the market it's the same as in Rugby - oversupply leading to reduced rental prices. The scale of reduction is less in Northampton - maybe 10% instead of 20% but the general theme is still there. The exception comes with 3 bed properties - the family market, which has seen a steady increase in recent months. Areas like Hunsbury and Duston always rent well, but the inability of families to buy a house means they are prepared to pay more to rent there (good schools etc), so prices increase - a staple 3 bed in either area which used to rent for £650 is now likely to get £700PCM. The other change has been in the poorer areas of town where quite massive demand from the Local Authority for private sector housing means that £575 can be guaranteed for any 3 bed property. In some areas you can buy one for £80k, and in these areas clearly the number of rental properties is increasing as landlords flock in! With a waiting list of 4000 properties, there's little chance of supply outstripping demand though.

READY TO GO @ 6%+. An Easy Renter

NORTHAMPTON
I've been made aware of the following property which is in immaculate internal order, and will rent easily for £550PCM.
Although advertised higher, I understand it can be bought for somewhere between £100k and £105k, which makes it interesting - especially given the internal condition.
If you don't like hassle, and want something that's ready to go, this could be the one for you.
Located close to the town centre - 10 mins walk from the high street. Clearly it's a freehold Victorian property.

richard.baker@belvoirlettings.com for more info.

NOW SOLD 6.5% in Northampton, easy renter

Suburban semi with a garage, Ecton Brook and very cheap at £120k ish - the type of property investors are often drawn towards for comfort reasons, but usually can't afford or don't get a great yield out of. This one will rent for £650PCM, so yield at 6.5%.

So why's it so cheap, I hear you ask. From what I can see, it's nothing more than presentation - who ever has got it currently isn't showing it to it's best potential. However there's not actually that much wrong with it - the fundamentals are there. It's just decor and flooring that's needed - nothing that couldn't be sorted in a week or so. As such it's a great opportunity for an investor to acquire a property that doesn't need too much work at a genuinely decent price.

NOW SOLD Grange Park for under £100k

Again, this isn't the highest yield in the world (about 6%) but it's Grange Park for less than £100k, and that alone will make it appeal to many investors. It's freehold too. And it's more or less ready for rental. If you want one of the better areas of town, and the probability of a good tenant, this is pretty much it.

It's a 1 bed coach house which will rent without too much bother at £495PCM. Advertised for £97.5k, it seems reasonable that you should be able to pick this up for £95k, possibly less. This gives the same sort of yield you'd get with a Victorian Terrace, but without the 'Victorian' issues that go with it. A very sensible bet for someone.

As ever I'm happy to discuss further with interested parties. richard.baker@belvoirlettings.com

HOW TO GET BUY TO LET WRONG

I do a fair amount of advising people what would make a decent rental property, so thought it might be an idea to devote a few paragraphs to what doesn't!

There's good reason for this - with the buy2let market increasing at pace (investor confidence is back!) we get new landlords coming to us with properties they have bought and now need a tenant. Usually these landlords have done some research and bought something that will work. Not every time though - sometimes investors get it wrong - here's 5 examples that have already happened in 2012. 

1. A property that a landlord had bought and wanted to rent it without spending any money on it. He thought this would be OK as the previous owner had had it rented and the agent who sold it him said the rental market was great at the moment. It is, Mr Landlord, but you still have to make sure your property is legal, and also consider if your property will still rent when the market isn't as great! As such when you open the back door and it 'falls out' towards the patio, there's mould / damp all round the front bay, and two of the bedrooms don't have any sort of heating, you're going to have to put your hand in your pocket!
2. A property that a landlady had bought and spent 6 months making feel like home. The highlight of this was an elegant 'roll top' bath which now had pride of place in the middle of the bathroom floor - the previous bath with shower over, having been ripped out to make way. To be fair, it looked lovely, but we were now being asked to rent out a 3 bed house without a shower. Sorry, Mrs Landlord, but that's not what good tenants want. More cash needs to be spent to make the property practical for a tenancy.
3. A 4 bed property in one of the nicer areas of Rugby that the landlord had spent about £250k on and now wanted £1200PCM for. The agent who sold the property to the landlord had said this should be possible, but after 2 months of trying, wasn't really getting anywhere. Given the ready supply of large modern property in Rugby (as people can't sell them) anything over £1000PCM is ambitious at the moment, and the landlord in question ended up with £925PCM.The yield he subsequently got meant, in his own words that he "wasn't much better off than leaving the money in the bank". 
4. A landlord who had spent about £5000.00 furnishing a flat he had bought to rent because "all flats are furnished where I live (Wimbledon), and I want a corporate tenant". He ended up achieving about £30PCM more than if the property had been unfurnished - not a great return on a £5k investment. Getting a corporate tenant is of course dependent on there being a demand in the market for such properties, which there may be in South London, but perhaps isn't as common in East Northampton.
5. A small, dated flat that the previous landlord had rented for £550PCM, and the new owner had done his figures based on achieving the same rent. "I don't understand it", he said himself, "I wouldn't pay a penny over £450PCM to live there". Exactly! So why do you expect someone else to? "But if we can't get £550PCM it wasn't worth me buying it". I think he had a point there.

My message to all investors would be to take some independent advice before purchasing, unless you're 100% sure of what you're doing. I say this because I know what happens when people don't. Even if it's not from ourselves, there are still a few regulated 'lettings only' agents in Northampton and Rugby who are well placed to advise on whether the thing you're buying will rent, and at what price. We're certainly more than happy for you ask, and I'm sure they are too.