By Andrea Wong, 21 February 2017

Top locations for property investors in 2017

Whilst the capital remains a popular choice for investors, many landlords have looked beyond London and to the North in anticipation. With rapid renovations to the Greater Manchester area and plans to develop the Liverpool city centre further, it is a great time to start looking further afield, especially with property prices soaring in London without an increase in the cost of rent. The gap between the average cost of property in London compared to the rest of the UK and Wales is becoming wider.

According to figures published by JLL, London underperformed in terms of rental yields compared to the rest of the country. With Brexit looming and causing uncertainty within the country, it has affected the capital the most. As a result of this, location is becoming an even more challenging aspect for landlords when looking to invest in property. With that in mind, we recommend that they look to invest in other cities. There are diverse and up-and-coming cities in the North that offer a range of impressive boutique student accommodation and residential properties.

Greater Manchester

Greater Manchester is expected to remain one of the UK’s most popular property investment destinations, with the balance between earning potential and property prices much more favourable than in the capital. One of the areas that has seen a remarkable transition in recent years is Salford’s MediaCityUK, which has become a creative hub for large corporations with both ITV and BBC relocating to the area from the South. According to JLL reports, Greater Manchester is outperforming the rest of the UK in terms of its GDP growth which is continuing to rise and is predicted to increase by approximately 5% annually until 2020.

Liverpool

A city at the heart of the government’s Northern Powerhouse initiative is Liverpool, with Chinese buyers particularly keen to invest in the area. Described as ‘one of the most pleasant cities in northern England’, Liverpool is home to some of Britain’s most ambitious developments and infrastructure schemes that have been valued at over £7 billion. Foreign investors have been tempted to invest in the city due to the weak pound after the EU referendum vote, high yields and a high demand in occupancy. With a total of four universities located in the area, and the University of Liverpool alone attracting many foreign students due to its partner university in China, there is a huge student population ensuring that there will always be potential tenants, especially with properties close to universities.

In addition, figures from Hometrack show that house prices in the city have grown by 2.6% in the past quarter, and with more development plans in the city this is the ideal time for landlords to take advantage of enormous investment potential.

Leeds

With a reputation as a cosmopolitan area, Leeds is truly an exciting place for both students and professionals to live in. The vibrant city boasts of the largest and fastest-growing workforce in the UK, making it a location where people tend to settle, so it is no surprise that investors are finding it the ideal city to invest in. The cost of living is over 20% lower than in the capital and with unwavering employment opportunities, the future is bright and would be a secure location to invest in.

Figures from Rightmove which show a 4% increase in house prices over the past year, and an increase of 10% since 2014, only underline the strength of the city’s housing market.

 

Chinese apartment buyers shift from Australia to UK

Regulators crack down on foreign lending amid fears of property price bubble

February 26, 2017

by: Jamie Smyth in Sydney and Yuan Yang in Beijing

Zhang Biao, a 32-year-old Chinese entrepreneur, has already thought about where his eight-year old will go to university. “We thought a flat overseas would be a good investment, and our son could use it for sixth form or university in Australia or the UK,” he says.

Mr Zhang and his wife put an offer down on a A$600,000 (US$460,000) flat in Melbourne in October, only to be told that they were no longer eligible for the 60 per cent loan-to-value mortgage they had applied for. Instead they decided to pay up front for a £120,000 flat in the English city of Liverpool. Mr Zhang is one of a growing number of Chinese property investors switching their focus from Australia to other markets as regulators — eager to moderate rapidly rising prices amid fears of a bubble — have increased pressure on banks to curb foreign lending.
This month, the Reserve Bank of Australia warned that residential building activity had been 50 per cent higher than long-term averages for two years and there was a risk that “newly completed apartments fail to settle”. A sharp correction in the property market could tip Australia into its first recession in a quarter of century, analysts warn. Gross domestic product contracted in the third quarter by 0.6 per cent, although most economists expect economic growth should resume in the fourth quarter. “We believe the [property market] correction will start with settlement problems for low quality apartments,” said broker CLSA in a recent report. “Our worst-case scenario would result in dwelling prices falling in all areas, eventually leading to a recession.”

The boom in foreign property investment has helped the Australian economy to continue growing despite sharp falls in mining investment. In 2014-15 Chinese investors were granted approval to spend A$24.3bn on property, more than three times the value of purchases from the US, the second largest group of foreign investors. The inflow of foreign capital helped push prices up in Sydney and Melbourne, the two biggest cities, by 67 per cent and 47 per cent respectively, over the past four and a half years. Foreign buyers account for one in five apartment sales. Now overseas demand is starting to weaken. Over the past two years the proportion of new property sales accounted for by foreign buyers in Australia has fallen from 16.8 per cent to 10.9 per cent. This drop is particularly felt in the apartment market. Building approvals for apartments fell by a fifth in the year to end-December. Unit prices have begun to moderate in Melbourne and Brisbane, edging up by only 1.7 per cent and 2.3 per cent respectively last year. “Chinese buyers are increasingly nervous about Australia because of recent instability in regulation, tax and bank lending rules,” says Esther Yong, co-founder of ACproperty, a Chinese language property portal. “A lot of Chinese who bought apartments off-plan three years ago are now finding it difficult to find finance as Australian banks have blocked lending to foreign buyers.”

The big four Australian banks — NAB, Commonwealth Bank of Australia, ANZ and Westpac — have all stopped issuing loans to non-resident borrowers with no domestic income. “We have essentially shut down mortgages to non-resident buyers,” Shayne Elliott, ANZ’s chief executive, told the Financial Times. He said the apartment market in Melbourne was “a little bit concerning” due to the proliferation in the city centre of small apartments, some under 50 square metres in size and with no bedroom windows. The withdrawal of bank financing has forced some property developers to ramp up vendor financing, which can leave buyers exposed if prices then fall. Meriton, Australia’s biggest apartment builder, offers buyers two-year loans, providing them with some breathing space to find alternative financing. “Our loan book has doubled over the last 12 months to about A$120m as the rule changes have left some foreign buyers in limbo,” said James Sialepis, sales director at Meriton, Australia’s biggest apartment builder. Other developers have begun offering discounts and rental guarantees on some properties. Increasingly, Chinese buyers are looking elsewhere. ACproperty recently teamed up with property listing company Listglobally, to launch a Mandarin language housing site called Sodichan.com focused on other international markets. “Our agents in China have been asking us to supply them with properties in other countries,” said Ms Yong. She said the UK had become popular after the Brexit vote because the fall in the value of sterling had made it cheaper for Chinese buyers. But Beijing’s tough new capital controls are making it more difficult to move large amounts of cash out of China. Foreign property investments by Chinese companies plunged by 84 per cent last month, according to the Chinese Ministry for Commerce. “For some Chinese buyers who have family connections in Australia, they will continue to buy there. But for others without these specific reasons, they will look at other opportunities,” said Ms Yong.

The Manchester property market is expected to see capital value growth of 28.2% over the next five years, as a result of growing demand and low housing supply.

Summary

• North-west property price growth is outpacing the rest of the UK
• Manchester is predicted to see price growth of 28.2% by 2021
• Property advisor JLL expects Manchester to be among the first choice for international investors targeting the UK’s build-to-rent sector

 

North-west house prices will increase by 18.1 % over the next five years, according to research carried out by property advisor JLL. This data follows a strong year for Manchester’s residential sector in 2016 which saw a 16% growth in capital values.

Buoyed by high demand and low supply, growth in the region is currently outpacing the rest of the UK. JLL predicts that as a result of this undersupply, rents and capital values will continue to increase dramatically in the coming years.

Capital value in Manchester is expected to see growth of 28.2% in the next five years, while rents are forecast to increase as much as 20.5% by 2021.

While the EU referendum vote has seen a marginal slowdown in transaction levels and a mild easing in prices, research experts at JLL are optimistic that Brexit will not negatively impact the growth of north-west property prices.

Adam Challis, Head of UK Residential Research at JLL, said: “In markets where there’s still a significant undersupply we’re set to see growth over the next five years, and the north-west in particular is a prime example of this.”

Stephen Hogg, Head of North West Residential at JLL, said: “Our five-year forecast points to the continued strength of the residential sector in the Northern Powerhouse. Manchester now offers some of the best returns in the UK and is at the forefront of the build-to-rent market in the UK regions.”

According to JLL, Manchester requires 3,300 new homes each year in order to meet current demand and expects build-to-rent developments will soon be at the centre of new schemes in Manchester. With a large number of developments in the pipeline and a significant price growth forecast, the city is expected to be among the first choice for international investors targeting the UK’s build-to-rent sector.

15 February 2017

By Marc Da Silva

UK house prices may have ended last year around £15,000 higher on average than when the year started, but the signs are that prices will continue to rise, supported by a ‘critical shortage’ in housing supply and ‘ultra-cheap borrowing rates’.

House prices across the UK as a whole increased by 7.2% in the year to December, accelerating from a 6.1% rise recorded in the year to November, pushing the average price of home up to £220,000, according to the Office for National Statistics (ONS).

The average price of a residential property is now £236,000 in England, £148,000 in Wales and £142,000 in Scotland, according to the ONS.

The East of England was the region with the highest annual growth, according to the ONS, with prices increasing 11.3% in the year to December 2016. Growth in the South East of England was 8.5% for the year. London, which continued to be the region with the highest average house price, at £484,000, was the third fastest-growing region with prices rising by 7.5% in the year to December.

Property prices in all three regions have been pushed higher mainly by a widening supply-demand imbalance in the market, coupled with record-low mortgage borrowing rates, and this trend looks set to continue, not just in the London, the East and South East of England, but across the UK as a whole, according to Rob Weaver, director of investments at property crowdfunding platform Property Partner.

He said: “At the risk of sounding like a broken record, the critical shortage in supply, alongside ultra-cheap borrowing rates are supporting house prices and that looks set to continue.

“Until more properties are built for both buying and renting, the market for investors looks positive as prices continue to move upwards although overall at a gentler pace than before.”

Tax changes, stricter lending criteria and regulation appear to have been somewhat dampening buy-to-let demand, but Weaver points out that owner occupiers remain the “driving force behind prices”, particularly in the regions.

He added: “The housing market may have plateaued during last summer but for the final two months of 2016, prices regained momentum.

“With December, in particular, seeing a higher than expected rise in annual prices, property demonstrated itself to be a robust investment once again in 2016.”

 

By Bea Patel, TLE Property Editor and Director of Shop for an Agent – the estate agent comparison website

Figures released last week (30 January 2017) from Centre for Cities highlights the shape of the UK’s 63 biggest cities in the run-up to the triggering of Article 51.

The 2017 data reveals a clear divide between the North and South, with goods being exported mainly from the North and services from the South.

Centre for Cities emphasise the relevance of trade and exports in the run-up to Brexit. Property investment consultancy, Properties of the World stressed the importance of inward investment.

Jean Liggett, CEO of Properties of the World, said: “2017 is going to be a landmark year for the UK’s cities. Seven of them will be electing metro mayors in May, with the newly elected officials having to hit the ground running in terms of dealing with the fall-out from the government’s triggering of Article 51, which should take place by the end of March. Trade, exports and investment will require firm, decisive management for cities to thrive over the year ahead.”

Greater Manchester and Liverpool City Region are two cities that will be directly electing their own metro mayors in May.

Both cities stand out in terms of their ability to face Brexit head-on, according to Properties of the World. Not only will their metro mayors and reliance on the production of goods stand them in good stead, but the cities have unique attributes that should be of use.

Jean Liggett explains: “Manchester and Liverpool both enjoy property-related factors that will help to see them through the choppy waters of the Brexit process. The latest Hometrack data shows that Manchester’s property prices grew at the second-highest rate in the UK during 2016, while Liverpool topped the table for growth rate over the past three months. These dynamic urban areas are perfectly positioned to lead the UK’s cities into Brexit and out the other side.”

The Hometrack UK Cities House Price Index reveals Manchester’s property market is growing at the fastest rate for more than a decade. It is second to Bristol in terms of its 2016 growth rate, and may be ready to overtake it during Q1 2017.

The 8.9 per cent year on year rise in prices experienced in Manchester is a result of a significant lack of supply – something which all UK cities are struggling with because of urbanisation and a rise in popularity of city centre living.

Liverpool, with 21.57 per cent of households renting privately (or living rent-free) according to Centre for Cities, is enjoying a property market boom. Prices rose by three per cent over the last three months – the highest rate of any UK city analysed by Hometrack.

Liverpool and Manchester are key UK locations for property investment from overseas buyers as well as domestic investors.

Rents rose by 1.2 per cent in the North West over the past year, according to the Office for National Statistics. But regional variations within the area’s cities resulted in much higher rises in urban locations.

According to Jones Lang LaSalle, rents in Manchester city centre rose by around 11 per cent in 2016. They project house prices will grow by 4.5 per cent per year for the next five years. HSBC has identified the city as one of the top four buy-to-let hotspots in the country, reporting rental yields of 7.6 per cent.

9 FEB, 2017 by Paulina Carl

The North West is the country’s third most populated region – after London and the South East – which means the need for housing is always huge for the Northerners.

The property market in England’s North West has seen a constant increase in interest from buyer as well as value in homes over the last couple of years. And with more and more people being pricedout of the London market and the Northern Powerhouse initiativepraising the area, more and more Southerners decide to make their way up north, too.

When it comes to availabilities in the North West, the area has got something on offer for any investor’s desire. With a broad range of population age and living situations as well as location, the market covers the whole property spectrum.

Liverpool and Manchester are the area’s biggest cities and they both offer great connections to for those interested in regular trips down to London as well as anywhere else on the island. Additionally, the arrival of the HS2 will only improve travel times and make the country grow closer together.

And the ever growing Manchester Airport, which has recently seen an investment of $100m, connects visitors to multiple locations within the UK as well as abroad.

They mean business

Although for most people England’s North will forever be connected with the textiles industry or the Industrial Revolution, these days it’s mainly IT, digital and financial services that can be found up north.

A variety of companies have recently decided to either relocate entirely to a northern city or at least open a second head quarter in the North. Especially with some Brexit uncertainty playing up, the North often gives the better options for business and investment.

Once you’ve made up your mind and you start looking around, make sure to not only check out the big cities. People are slowly moving further out, and so are the best investments.

BYDOMINIC SMITHERS (21:45, 12 FEB 2017)

You only need to look up at the cranes which dominate the Manchester skyline for evidence of the region’s booming property market – but it’s not all about big developers.

Investing in property – whether it’s a run down terraced house or a ready-made purchase to let out straight away – is a fantastic way to make money, whatever your budget.

So, we’ve quizzed estate agents, developers and investment firms to put together a guide on making money from the local property market.

To break it down we have split it into five different models; student lets, immediate return, long term investment, off-plan developments and ‘fixer uppers’.

Here is everything you need to know if you’re thinking of becoming the next Sarah Beeny.

Long term rental investment

Wythenshawe

Why?

South Manchester has a combination of good schools, great transport links and a variety of housing stock, which makes it a good option for anyone looking for a relatively stable place to invest. And our experts suggest looking at Wythenshawe in particular.

The extension of the Metrolink service to the area is already causing increasing demand for property there.

Rob Jones, director of Property Investment UK, said: “The infrastructure in business and commerce near the airport is certainly having – and set to continue to have – a ripple effect on demand and house prices are continuously increasing.

“Wythenshawe I would definitely say is part of that and should get growth as well.”

A spokesperson for Manchester Airport said: “The growth of Manchester Airport also brings benefits to the surrounding communities and the wider region as a whole in a number of ways. From job creation, increased inward investment/tourism and economic benefits from our annual dividend, a growing Manchester Airport is a positive for millions of people.”

Where?

Over the years, some areas of Wythenshawe have had a bad reputation but successful property investors will tell you not to judge a book by its cover.

Wythenshawe has undergone a massive shift in recent years. With increasing transport infrastructure in the area by way of the Metrolink as well as the £280m airport expansion scheme, the town is definitely on the way up.

Sean Callaghan, Managing Director at Callaghans Estate Agent, said: “As with many inner city areas, Wythenshawe has experienced high levels of unemployment, underachieving schools and a lack of high grade shopping facilities.

“The injection of funding into the area, increased job opportunity and more affordable housing is already having a positive impact. We have seen a marked turnaround in recent years with the refurbishment of the Civic Centre, increased employment at Manchester Airport and the Amazon Warehouse.

“In terms of property we know that long-term, secure positions at the airport will create a further demand for first time buyers and Investment buyers.”

Now you have the area, where is good to buy?

According to the experts, the staples of investment will always be transport links, schools and amenities. Roads running along the tram line therefore are proving particularly popular with buy-to-let investors, such as Simonsway in Woodhouse Park, or Hollyhedge Road in Benchill, both of which were singled out by local estate agents, Callaghans.

Price

A three bed semi will cost you between £110,000 and £160,000.

At current market prices you can expect a return – depending on what part of Wythenshawe you buy in – of anywhere from £600 to £1,000 p/m.

If your budget isn’t quite as flexible then you might be tempted by a more modest terraced house, which are available for around £90,000 to £115,000.

Pitfalls?

No investment is 100 per cent safe, so it’s not for the faint hearted. You can’t just ‘dip your toe’ into property, it’s called an investment for a reason.

Buying at auction, for example, can reap huge rewards but you also need to be prepared for expensive pitfalls.

“Once you’ve signed on the dotted line it’s yours, warts and all, so you need to make sure you’ve done all your due diligence and have the money to pay for it”, said Andrew Thompson, from Edward Mellor auctions.

Having the money to finance the investment for the long term is also vital as there may be times when the house is left empty and without a tenant. This will mean either waiting for a tenant to come in or taking a hit on the rent you charge.

Immediate rental yields

Droylsden/Denton

Why?

Droylsden and Denton are our top tips for an immediate profit.

Charlotte Puddy, from Abode Property Management, said: “They are really great. You can buy a three bed property there and you will rent it out straight away.

“People that live in these areas are generally those who have always lived there and have family roots there.”

That, combined with the expansion of the Metrolink network in 2010 through to Ashton-under-Lyne, has helped join towns like Droylsden and Denton up with the city centre, making them great commuter options.

Where?

You don’t have to be a property expert to know that WHERE you buy is probably more important than WHAT.

People want to be close to everything; shops, bars, coffee shops and transport links. If they are too far away from them it’s only going to affect what people are willing to pay.

Unsurprisingly then, you want to be right in the centre.

If you’re looking at Droylsden that means roads coming off Market Street and Manchester Road, where trams run regularly down to the Etihad campus.

For example, Tame Road in Denton has a wide selection for semi detached properties, close to the town centre and recreational pitches.

Laura Dawson, office manager at Sleigh and Son in Droylsden, said: “It’s true, rentals are booming here.

“A couple of reasons behind that are that house prices aren’t too high and with the tram it’s great for people getting into the city. Being able to commute is a big factor for people.”

Price

House prices have risen by over £4,000 in Droylsden and Denton in the past twelve months, so if you’re looking for a bargain you may need to move quickly.

If you’re working with a smaller budget then you may opt for a terrace, which will set you back an average of £107,862 in Droylsden, and a touch more, £111,450, in neighbouring Denton.

Ms Puddy said: “Denton has an excellent supply of two and three-bed terraces, often garden fronted. There are pockets of new build properties across Tameside and we expect this to increase as house building continues to rise, however the traditional style terraces form the bulk of the property stock in the area.”

However, according to experts the best money is in larger properties, which attract growing families who want to stay for several years.

If you’re looking for a longer term tenancy then with a higher yield then a three bed detached house might be a good option.

The average semi-detached home in Denton goes to market for around £157,480 while you can pick one up in Droylsden for just £132,003. But like anything prices can vary on the state of the property to its location as well.

Pitfalls

Again no investment is fool proof, so if you haven’t got the finances and the patience then you should consider if it is really for you.

Despite both demand for properties and a high rental yield (7 per cent approx) nothing is a certainty, so as with all types of investment, do your research.

Student rental

Fallowfield/Salford

Why?

As we’ve said on numerous occasions, Manchester is the best city in the world and no one knows that better than the students who flock here in their thousands every year and not just because we have the 55th best university in the world.

Manchester has a fantastic reputation, it’s every bit a modern city and is always at the forefront of everything from food and drink to art and music.

So, when you have over 70,000 students descending on a city each year they are going to need somewhere to live.

Also students tend to live in larger groups, so instead of having one tenant or a couple in a flat, you could have anywhere from three to 10 in a property.

This is a massive incentive for investors as it means that you can make more money from less property.

And because of the sheer volume of students, you will have a constant supply of tenants, leaving your property empty for a much shorter period of time.

Where?

Graham Davidson, managing director of Sequre Property Investment, said: “Those looking to invest in a property that will attract student tenants should stick to the city centre as this is where rental demand from students is highest. They want to be within walking distance of their campus and have easy access to shops, bars and sports facilities.”

Fallowfield, Rusholme and Withington are synonymous with student housing and attract the majority of the student population, year in, year out.

Fallowfield is home to different styles and sizes of property, such as larger, traditional Edwardian properties on Egerton Road to blocks of flats on Granville Road and elsewhere.

Students going to Salford University will however be looking at roads closer to campus, meaning streets off Frederick Road are popular.

Pitfalls?

Student rentals usually have fantastic financial returns but they do come with some drawbacks that any potential investor should look out for before jumping in, head first.

You need to be prepared for anything and everything to break on regular basis, including furnishings, doors and windows.

Charlotte Puddy said: “I believe the rental yields are really good, but it completely depends on what kind of person you are.

“For the right person you can make a lot of money, however students today are demanding a lot more from their properties; wifi, flat screen TVs, etc.

“Gone are the days when students would accept living in a pit.”

Therefore, there is increasing competition from luxury student living, especially in cities like Manchester. Vita Student and Lambert House offer free breakfast, wifi, Netflix and even bowling alleys in some cases.

This isn’t for everyone though, most students still prefer things in Fallowfield and Withington, a bit rough around the edges, which you can’t recreate in other parts of the city.

Off plan

City Centre/Salford

Why?

Our city’s skyline has changed dramatically over the past ten years, with a new apartment block or office tower popping up seemingly everyday.

There is a buzz around they city centre, which has seen the population mushroom to over 90,000. As a result demand for property in Manchester has never been greater.

Ged McPartlin, director at Ascend Properties, said: “Development is coming out of the ground thick and fast across Manchester in order to meet the demand for new homes. The city centre is certainly seeing a fantastic wave of new PRS schemes and development is rife so investors would do well to consider investing here if they want to buy off-plan.”

Also, off-plan can sometimes give investors the chance to get a property for cheaper than they would if they bought it after completion.

This is of course a gamble, but depending on the success of the site can save you thousands.

Michael Jones, from Residential Investment, said: “Off plan investments are attractive as early buyers can have the pick of the best units available and secure an apartment at the lowest price, as most developers increase the price as construction advances.”

Where?

We recommend the NOMA development close to Victoria train station. It’s an area which has undergone an incredible transformation, seeing around £800m pumped in to develop the area.

With the Co-op being based there and a host of transport links including trams and national rail lines, it’s perfect for commuters wanting to live in the city centre, but also the freedom to get out.

At the other side of the Irwell, Middlewood Locks is set to be built, with over 2,000 homes planned.

This is a case where being a bit further out of the city can actually work in its favour.

Charlotte Puddy said: “It’s a good little area around there. You can walk into town but you can also jump in your car and get out of the city. It’s got great transport links with the A57 running right past it.”

Price?

That’s a bit like asking how long is a piece of string – it really depends on what you’re willing, and able, to pay.

Prices vary from scheme to scheme, based on multiple factors such as the build cost and the location, so it’s hard to get an average.

You could purchase a two-bed flat in Halo Apartments, right in the heart of NOMA, for around £210,000.

If you were to invest in St John’s Quarter, on the site of Old Granada Studios, you could be looking to pay almost triple that.

Similarly, Angel Gardens is planned to be built there, with approximately 466 flats and will no doubt be a draw if completed.

Pitfalls?

Off-plan developments are fraught with risk.

It might seem like a safe bet – a new build with modern appliances and a city centre location.

But there can be problems such as delays and increases to the build cost. Perhaps most importantly – will people want to live there when it is complete?

You are putting a lot of money – and trust – into a developer to do a good job on the property, so it’s vital that you research their company and its history thoroughly.

Giles Beswick, Director of Select Property Group, said: “When buying purpose-built schemes, the credibility of the developer and the clarity of who’ll be managing the property are key factors to consider.

“A lot of providers charge a high initial fee to reserve a property. Because they’re not always the developer themselves and have third party costs and commissions to pay, they need the capital to front the project. This should be a red flag for investors.”

Also, we hate to break it to you but you will not be the first to think of the idea. Off-plan investment is not a secret, so expect competition.

That means you might have to wait some time to let out your brand new flat, even when it’s finished.

Charlotte Puddy said: “You could buy in a development where there are 50 flats and then when you try and let it out so does everyone else. If it’s in demand it’s great, but if it’s not and you can’t (let) then you will have to drop the price.”

Fixer upper

In the age of ‘Homes Under the Hammer’ and ‘Location, Location, Location’, everyone seems to fancy themselves as a property expert.

People like the idea of buying a property, doing it up and selling it for a massive profit, but sadly it doesn’t always work like that.

We don’t want to sound like a broken record but research is key, as well as having the finances to back it up.

Andy Thompson said: “When looking for a ‘fixer-upper’ the general location is less important in my opinion – it’s more about the value and potential value of a particular property.

“Done properly, there can be really lucrative rewards in renovating and selling on a property but it’s a fiercely competitive market and therefore it pays to keep an open mind with regards to your ‘target location’ and not necessarily pigeonhole yourself to just the areas that you ‘know’.”

How?

You can buy a great house but if no one wants to live in the area then it’s useless.

Similarly, if you buy a derelict property with all manner of things wrong with it, even if it’s in a great spot the cost to get it up to scratch might not even cover your outgoings.

It’s all about keeping those books balanced, which is often the most difficult thing.

Andy Thompson said: “For me, the profit is in the purchase; if you pay too much for the actual building, whatever improvements you go on to make, you’ll always be on the back foot with it. The flipside to this is, if you buy well, often you won’t need to get your hands overly dirty to make a decent profit.”

So, the advice from the experts is, if you’re thinking about taking on a challenging property, keep it as simple as possible.

Andy added: “If you’re new to the game it might be better to cut your teeth on a smaller project, somewhere like Edgeley, in Stockport, where there is a mass of terraced houses.

He added: “These are not only easier to physically renovate but they’re also easier to value, so you’re less likely to pay too much for something and struggle to sell it later on.”

Examples?

Jamil Shahid took to property development after retiring after having experience as a landlord in the past.

He has taken on several broken-down homes and renovated them to sell on.

Most recently he bought a four-bedroom detached house in Levenshulme for around £205,000 which has now gone one the market for £340,000.

He said: “I have always been interested in property and had a few apartments in town for years but since I stopped working I now have more time.”

But how do you decide WHERE you should invest?

According to Mr Shahid it’s best to stick to what you know.

He said: “I only look in south Manchester because I don’t know the north very well. I have lived here for years so I know it and I’m used to the area.

“I’m sure there are bargains to be had in the north but I haven’t been there yet.”

Prices?

Again they can vary greatly from auction room to auction room, depending on the interest.

You can therefore pay any price, from £30,000 to upwards of £200,000. The key thing is to always stick to your budget, because you will need the extra cash when it comes to renovation.

And don’t forget you will still have a mortgage and stamp duty to pay, with or without a tenant.

Pitfalls?

Perhaps more than any other kind of investment here, buying a property in bad condition poses the most risks.

Things can and will break, so you need to be prepared for the cost.

Charlotte Puddy said: “You need to make sure you don’t pay more than it’s worth.”

This is a sentiment shared by experienced buyer Mr Shahid.

He said: “The price can sometimes be too much, even in the auction room, but it can depend on how many people are interested.

“So you have to have the finances and you need experience.”

Buying the property is only half the battle, once you have it, that is when the real work starts; renovation.

This is the part that can often trip investors up. They have watched one too many episodes of Grand Designs and spend all of their budget in a week.

According to the experts, finances are key and you will always need something for a rainy day.

For example. Mr Shahid’s property in Levenshulme cost around £60,000 to renovate with another £15,000 in stamp duty.