Investing
in Canterbury buy to let property is different from investing in the stock
market or depositing your hard-earned cash in the Building Society. When you
invest your money in the Building Society, this is considered by many as the safe
option but the returns you can achieve are awfully low (the best 2-year bond
rate from Nationwide is a whopping 0.75% a year!). Another investment is the Stock
Market, which can give good returns, but unless you are on the phone every day
to your Stockbroker, most people invest in stock market funds, making the
investment quite hands off and one always has the feeling of not being in control.
However,
with buy to let, things can be more hands on. One of the things many landlords
like is the tactile nature of property - the fact that you can touch the bricks
and mortar. It is this factor that attracts many of Canterbury’s landlords –
they are making their own decisions rather than entrusting them to city whizz kids
in Canary Wharf playing roulette with their savings.
I always
say investing in property is a long-term game. When you invest in the property
market, you can earn from your investment in two ways. When a property
increases in value over time, this is known as ‘capital growth' which we know
has been strong in recent times in Canterbury. The second way you can benefit
is the rental income which will also grow over time. If you divide the annual
rent into the value (or purchase price) of the property, this is your yield, or
annual return. So, over the last 5 years, an average Canterbury property has
risen by £91,050 (equivalent to £49.89 a day), taking it to a current average
value of £339,800. By adding this to the rental income that could be earned can
easily see returns of 10% per annum which I think you will agree is
substantially above the aforementioned 0.75%.
However,
something I haven’t spoken of before is the more specialist area of flipping
property to make money. (flipping - buying a property, carrying out some minor
cosmetics and re selling it quickly). I
have seen several investors recently who have made decent returns from this
strategy. For example …
One Canterbury
Investor paid £190,000 for a 3 bed terrace on Chestnut Drive in February 2015.
It appears some cosmetic work was done to the property and it was resold a few
months ago (November 2016) for £275,000 … 44.74% return before costs
This demonstrates
how the Canterbury property market has not only provided very strong returns for
the average investor over the last five years but how it has permitted a group
of motivated buy to let Canterbury landlords and investors to become particularly
wealthy.
As my
article mentioned a few weeks ago, more and more Canterbury people may be
giving up on owning their own home and are instead accepting long term renting
whilst buy to let lending continues to grow from strength to strength. If you
want to know what (and what would not) make a decent buy to let property in Canterbury,
then please get in touch.
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