Northampton: What can you buy for £60k?

When most people look for a buy-to-let investment, they have a budget. With that in mind, over the next few weeks, I’m going to look at what a given sum should buy you in Northampton. In doing this, I’m talking about properties in good lettable order, so if a property needs works doing, this is what you should budget INCLUDING works.
Have a read, and if you want a chat about properties you've seen, EMAIL ME! richard.baker@belvoirlettings.com.

What will £60k buy in Northampton?

At this price band, you’re really restricted to leasehold properties. However there’s still money to be made! Your only real options are:

A 1 bed flat in an ex Local Authority area, such as the one pictured below. A landlord bought this in 2012 for £55k all in, and it will rent for £420PCM. That’s a 9.1% yield.

A 1 bed flat somewhere near the town centre. At this price, these will be well coveted by investors, so are few and far between. A landlord bought this (below)  in 2012 for £55k all in and gets £450PCM privately. That’s a 9.8% yield. 

NOW SOLD 6.8% yield on a £110k purchase

It's not often you can pick up a reasonably modern 3 bed property for £110k, but here's your chance. Assume this will rent for £600PCM - in practice it will be more. Private (working) tenant too. Advertised at £110k, I think you should be trying to buy for around £105k and spending the difference on it - it's actually in quite good order, but would benefit from some improvement in places.

Located in Cherry Lodge, this isn't a premium area of Northampton, but then £110k isn't a premium price. For those landlords who don't want high risk, don't want to spend £125k+, and don't want the maintenance of a Victorian Terrace, this is for you - what more could you want?

STOP THE PRESS : A decent investment in Rugby!

I frequently bemoan the lack of a decent buy to let opportunity in Rugby, but here's one that fits the bill - finally!
This is a 3 bed Victorian Terrace near the station. It isn't huge, but looks to be in decent order and with 3 bed will rent for £550PCM. Assuming you can pick it up for nearer £90k than the advertised £95k, that's a yield of over 7% - surely the best think I've seen in 2012?

The unusual thing here is property condition. This has a decent kitchen and bathroom in - far better than standard Rugby rental stock. richard.baker@belvoirlettings.com for more details.

BUY TO LET : How to get a 9% yield in Northampton

I have an increasing number of investors looking for the guarantee of high yields. Different investors have different criteria - some are seeking as high as 15%, which is difficult in Northampton unless you let large properties on a room by room basis. Most seems to regard 8-9% as a good yield - and it certainly is when you consider that the best savings accounts are currently paying around the 3% mark.

So how do you get a yield of 9%? More often than not, Landlords look to raise the rent. This generates more income and squeezes out a higher yield. This is possible in the current market - in the 6 years I've been a lettings agent, rental prices have never been stronger, but whether it's sustainable is another matter. What happens when rental prices aren't as strong? A fair number of investors don't worry about questions like this(!) and may find in the fullness of time that their high yield investments aren't as high yield as they think.

I'd argue strongly that the best way to get yourself something high yield is to concentrate on the price you're paying for the property, not the rental value. If you can buy a property cheaply, you've got a built in insurance policy that means if the rent moves around a bit, you're still operating at a high yield - you don't HAVE to rent it for maximum money on EVERY occasion.

A landlord's other fall back is the LHA market. Unless you're buying in one of the premium areas of town (which is unlikely if you're after a decent yield) there's a constant demand for properties from the Local Authority - currently over 4000 homes are required and the figure is growing. This is your safety net, because you know your property will let for a set price. Using the LHA pay scale as a guide, ANY property you buy in Northampton will generate you a 9% yield as long as you pay less than the following price for it:

1 bed	Anything less than £56k
2 bed	Anything less than £70k
3 bed	Anything less than £79k
4 bed	Anything less than £106k

This actually makes property investment really simple. Stay within these price bands, and you're guaranteed a high yield. Properties in these price bands sell really quickly for that reason - you'll have seen some on this blog. They are out there though, and particularly as repossessions they come up on a reasonably frequent basis. For the novice investor, they are probably a good place to start.