A buy-to-let property is all about the total
return on investment. You could put the money in the Post Office bond and
receive interest of £3,800 a year or, invest in property. The average yield (yield being the equivalent of the interest rate on the property) at
the moment in Oakham is 3.95% per annum, meaning our potential first time
landlord should be able to, depending on what he bought in the town, earn
before costs £7,900 a year. However, there are plenty of landlords in
Oakham earning half as much again (if not more) if you are willing to consider
more specialist investment types of properties.
If you want to know where, please look at my blog or drop me an email.
The bottom line is that the success of investing
in buy-to-let property versus a savings account will depend on the performance
of those assets. Unlike with a savings account, with property the capital you
invested can also go up (and yes, it can go down as well – more of that in second).
Property values in Oakham have risen in the last
12 months by 1.6% meaning, that if you had bought a year ago, not only would you
have received the £7,900 in rent, but you would also have seen an uplift of £3,200
meaning your overall return for the year would have been £11,100.
The doom mongers out there will say property
values can go down, as they did in 2008, and in 1988 and 1979. But after 1979, prices had bounced back to
their 1979 levels by 1984 and went on to grow an additional 58% in the
following 4 years. Then again, they dropped in 1988 and did take 13 years to
reach back to those 1988 figures, but the following 6 years (between 2001 and
2007) they then increased by an additional 66%.
Now, according to the Land Registry, average
property values in Rutland currently stand 0.14% above the January 2008 level,
and anecdotal evidence suggests that in the nicer parts of Oakham, we are well
above these sorts of levels.
For advice on what the Stamford and Rutland
property market; high yields, high capital growth, what to buy and what not to
buy, please contact me or read my weekly property blog. I am happy to share my thoughts and local
property investment knowledge with you.
David Crooke
MD & Owner
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