We like to keep an eye on the market for our landlords for any potential buy to let investments we believe to be worth considering. This month we have found three! These properties are not on the market with us however if you would like to discuss them and the rental potential then please feel free to contact me.
Property 1 -
1 Bedroom Flat - Leasehold - Derwent Rise, Flitwick - OTM with Taylors - Guide £130,000 - Approximate Rental Value of £695 PCM - Potential Yield of circa 6%
Whilst the lease details haven’t been published, the property is in overall pretty good condition judging by the details, so long as the least is long enough to be mortgageable and the service charge and ground rent not sky high, a return of around 6% per annum shouldn’t be too difficult if you can shave between £5,000 and £10,000 off the guide price and with interest rates as low as 1.19% mortgage payments could start at around £120 per month interest only or £320 per month on capital repayment. More mortgage information available at the bottom of this page.
Long term assumptions, based on an occupancy rate of 95%, a holding period of 10 years and an annual appreciation of 4%, a cash investment now of around £40,000 could leave you with over £100,000 in equity and just under £80,000 worth of rent collected.
Property 2 -
Modern 2 Bedroom End of Terraced House - Freehold - Goose Green, Flitwick - OTM with Sheridans - Guide Price £225,000 - Approximate Rental Value of £875 PCM - Potential Yield of circa 4.75%
This is a tentative investors dream in my opinion and possibly my favourite of the three. You don’t quite get the monthly return you can get on other properties, however the property is not very old, offered in great condition and is a completely straight forward let. Assuming its possible to knock £10,000 off the guide price and considering its been on the market for 7 weeks today that should be a possibility, a 4.75% yield is entirely possible, achieving a rent of £875. There is a higher amount of cash required for this deal than the apartment above, however using the same interest and loan to value as previously, interest only mortgages could be as cheap as circa £200 a month with capital repayment raising this to around £600 a month. However this is a great long term investment as freehold properties tend to see greater capital appreciation so this time if we base the long term metrics on an occupancy rate of 95%, a holding period of 10 years and an annual appreciation of a higher amount of 7%, the cash investment required now would be circa £70,000 however this could leave you with over £270,000 in equity and just under £100,000 worth of rent collected.
Property 3 -
3 Bedroom Terraced Cottage - Freehold - Railway Cottages, Kempston Hardwick - OTM with Urban & Rural - Guide Price £225,000 - Approximate Rental Value of £925 PCM - Potential Yield of circa 5.25%
This property has been on the longest, so whilst I’ve calculated the approximate yield to be 5.25% the truth is, its all very dependent on how low you can negotiate the price.
We have let and managed a few of these cottages over the years, and once occupied they tend to stay occupied, however the location does mean that capital appreciation is lower than typical for this type of property, so your monthly rental yield is the most important factor, so get that negotiating hat on and see how low you can get the price down. Its been on since before September, with its price reducing in on the 16th September to the current level. I’ve managed to get a 5.25% yield basing it off a purchase price of £205,000. The cash required and mortgage costs are similar to those as goose green, however we I would anticipate a lower capital appreciation, more in the region of 3% per annum. Base on the same metrics as before with an occupancy rate of 95%, a holding period of 10 years and an annual appreciation of 3%, the cash investment required now would be circa £70,000 however this could leave you with over £130,000 in equity and just over £105,000 worth of rent collected.
BUY TO LET MORTGAGE RATES
We have teamed up with Aqua Mortgage Services which is an independent whole of market broker to find the best rates available for our landlords.
The latest rates available as of 24th January 2021 are as follows;
2 year fixed rates
The Mortgage Works | 1.19% - £2% fee - Maximum 65% loan to value.
The Mortgage Works | 1.59% - 2% fee - Maximum 75% loan to value.
Santander | 1.40% - £1,499 fee - Maximum 60% loan to value.
Purchase - free valuation and £250 cashback.
Remortgage - free val and free legals or £250 cashback.
5 year fixed rates
The Mortgage Works | 1.64% - 2% fee - Maximum 65% loan to value.
Santander | 1.83% - £1,499 Fee - Maximum 60% loan to value.
Purchase - free valuation and £250 cashback.
Remortgage - free val and free legals or £250 cashback.
Accord | 2.03% - £1,995 Fee - Maximum 75% loan to value.
Purchase - free valuation and £250 cashback.
Like the idea of having a fixed rate for stability but don’t want to be tied in? These products come with no early repayment charges!
Coventry Building Society
2 year fixed rate of 1.79%, max 65% LTV, £1,999 fee - can be added.
2 year fixed rate at 2.15%, max 75% LTV, £1,999 fee - can be added.
5 year fixed rate at 2.15%, max 65% LTV, £1,999 fee - can be added.
5 year fixed rate at 2.55%, max 75% LTV, £1,999 fee - can be added.
All rates are subject to terms and conditions and availability, lenders can withdraw rates at any time.