During the week I spoke with a number of local landlords regarding the property market in Exeter,
when the subject of risk against returns arose.
All landlords
are different in the way they play the property game. Some landlords prefer to
accept a modest yield/return on their investment for an increased certainty of
finding a quality tenant. Others are interested in high returns, with
a greater risk with regards to the quality of the tenant and void periods. Before you start
playing, it is a good idea to have a game plan.
For a low risk
investment, you could buy property in the areas of Exeter which are
perceived as being more desirable, such as St Leonards and Pennsylvania,
where you may be able to achieve an annual yield of around 4-5%. These properties tend to let very quickly and achieve a high rent, however they are expensive to purchase, which then pulls down the rental yield.
If
you are after annual yields of 5-7% and over, you could take more of a risk
with houses of multiple occupancy in the popular student areas, however you
have more of a risk of wear and tear and potential damage on the property. Similarly if you have read our previous articles about capital growth over yield you will know that generally the less you spend on a property, the higher gross yield you should be able to achieve, however you will likely achieve a lower capital growth.
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