With Interest rates still at a all time low Investing in the Northampton buy to let market is becoming more appealing than depositing your hard-earned cash in the Building Society and achieving less than 1% interest per year or gambling on the stock market. Also with the risks of becoming a landlord, covered by our guaranteed rent scheme I am getting more and more calls from investors looking to move into the buy to let market.
I always say investing in property is a long-term game. and when you invest in the property market, you can earn from your investment in two ways.
Firstly : Capital growth, also known as capital appreciation, is when a property increases in value over time, This has been strong in recent times in Northampton, but obviously the value of property can go up as well as down just like shares do but the initial purchase price rarely decreases. over the last 5 years, an average Northampton property has risen by £58,700 (equivalent to £32.16 a day), taking it to a current average value of £240,600.
Secondly : Rental income – hopefully this will also grow over time. Now If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return. A good Yield will range from about 5% a year and properties I consider decent buy to let deals that I post weekly on my blog for you to invest in try to run at around 7% in Northampton.
However, something I haven’t spoken of before is the more specialist area of flipping property to make money. flipping – is 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 Northampton Investor paid £105,000 for a 2 bed terrace on Lower Adelaide Street in February 2015. As you can see some cosmetic work was done to the property and it was resold a few months ago for £136,500 … 30.00% return before costs (or compound annual return equivalent of 16.53% AER
- Another Northampton Investor flipped a lovely 3 bed semi on Sandiland Road, paying £155,000 in May 2015 and selling it again after some doing some basic cosmetic works, sold it for £219,000 in October 2016 … 41.93% return before costs (or equivalent 26.87% AER
This demonstrates how the Northampton 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 Northampton landlords and investors to become particularly wealthy.
As I mentioned a few weeks ago in my Blog, more and more Northampton 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 Northampton then please get in touch