Investing in Warminster 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 Warminster’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, it is known as 'capital growth'. Capital
growth, also known as capital appreciation, has been strong in recent times in Warminster,
but the value of property does go up as well as down just like shares do but the
initial purchase price rarely decreases.
Rental income is what the tenant pays you - hopefully this 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 Warminster
property has risen by £60,550 (equivalent to £33.18 a day), taking it to a
current average value of £289,800. Yields range from 5% a year and can reach
double digits’ percentages (although to achieve those sorts of returns, the
risks are higher).
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 Warminster Investor
paid £140,000 for a 2 bed terrace on Middleton Close in September 2015. Some cosmetic work was done to the property and it was resold a few
months ago (October 2016) for £165,000 … 17.86% return before costs (or compound
annual return equivalent of 16.76% AER) http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=61671398&sale=4437082&country=england
This demonstrates how the Warminster 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 Warminster
landlords and investors to become particularly wealthy.
As my article mentioned a few weeks ago, more and
more Warminster 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.
