Buy-to-let
in Exeter is currently very popular. We
have seen a vast increase in the number of investors contacting our office
looking to purchase their first or an additional property.
With
the current number of investors looking to buy-to-let and the lack of top
rental property on the sales market, it is easy to see why some purchases are
made without having the time taken to fully analyse the market to ensure there
is longevity in the investment. We have
previously looked into the potential rental returns of property a number of
times, however the renovation of property can also provide a large boost to the
capital growth of an investment.
There
are many stories where investors have got it exactly right, like a property in St
Leonards which sold for £178,750 in December 2012 then again for £246,500 following
refurbishment just over two years later, giving a gross profit of 37.9%. Granted they have spent some considerable
money on the property and it looks superb, however with an increase of £67,750
there must be a reasonable profit.
On
the other hand, at that time in 2012 for around £180,000 you could have bought
a 2 bedroom apartment at the Quay or near the city centre in good condition,
let it for around £800pcm but still have a value of around the £180,000 mark. A two bedroom apartment for a similar price to
a decent semi, doesn't in hindsight, quite stack up. Although these stories are
few and far between, I still see mistakes being made on a day by day basis in Exeter.
If you make even a small mistake, it could still prove to be very costly.
So
what should you buy in Exeter? One option is a House of Multiple Occupation
(HMO). While they can be profitable, they can make things considerably more
complex and costly, with the need for an HMO licence, higher levels of wear and
tear and so on. If you look back at some
of my previous articles, you will see a lot of interesting facts on which types
of properties let well and also, sell well!
Mortgage
rates on buy to let are also very low at the moment and for the right property
and person you can get rates below 3.9% if you put down a decent deposit of
25%, but the best rates are for deposits of 40%+. Also, the deposit will ensure
you have plenty of equity in the property, if the property market stagnates in
the future. The important thing to remember is the amount you can borrow is
driven by the rental income, so it is vital you can identify a property with a
decent yield, that lets easily.
Finally
though, if are investing so much time and money in building wealth for you and
your family, it is equally important for you to identify ways to protect it. Do
not forget, if you spend years building a successful property empire in Exeter,
when you are no longer around, your family could face an inheritance tax bill
of 40 %, which they would have to pay within six months of the death. In a
buoyant market, like now, selling in six months is not an issue, but what if
the market was like it was in Exeter between 2008 and 2012, when things took
seasons to sell, not weeks. Quite apart from losing nearly half of the assets
you built for your family to the tax man, if they had to sell some of your
portfolio, possibly at a discount because the taxman wanted his money quickly,
it might be wise to consider some life insurance that will offer protection
against inheritance tax.
There
are plenty of good advisors in Exeter who can help you with the mortgages and
life insurance, we would be able to point you in the right direction for this.
We can also help you choose the right Exeter property to buy and we
currently have a number of superb properties for sale with tenants in situ so please
call us and we can advise you on the latest best buys.
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