Investing in Rental Properties

Brentwood Lettings work out of North Manchester and East Manchester, we know this side of the city like the back of our hands and have our fingers on the pulse when it comes to buying investment property.

drawing-of-three-houses-where-it-reads-buy-renovate-resellThere are many ways in which a person can make a living when it comes to property investing, some of them carry more risks than others.  It goes without saying that those that carry the greatest risks are often the very real estate investment methods with the highest potential profit but slow and steady, in many cases, wins the race. Flipping houses is in the news a lot because so many fortunes have been made doing this-more than a few have been lost in this venture as well but those don’t make the news nearly as often.

Working with rental properties isn’t nearly as glamorous and doesn’t provide the almost instant profits that flipping houses might but it is also a great and very valid method of property investing that will build a steady profit over time if you plan properly.

Rental properties, in Manchester are in demand now more than ever with so many people going into foreclosure and losing the homes they’ve worked hard to build for their families. For this reason rental properties are a good thing to own at the moment, especially those that are family homes.

There are many reasons that people rent and while there are some risks involved when renting properties, the risks are much lower than the risks involved in flipping or pre-construction investment endeavors. There are a few things you should consider when purchasing a property for the sake of renting however in order to make a wise and long lasting decision for your real estate investment.

location for rental property in manchesterOnly invest in rental properties in areas that people want to live in.

It may be true that you can buy property cheap in a few very run down sections of town but it is doubtful that you will turn those properties into profitable rental units. It is best to pay a little more for a more attractive address for renters. You will find that your properties are inhabited more often, which will make you more money in the long run.

Unsure? this is where we step in, we can tell you in an instant if an Area, a Street or a House is a good buy for renting or is likely to cause you problems. How? We live and breathe property lettings in Manchester, we know each and every street as if it were our own.

 

Pay attention to the types of people in the area and buy rentals accordingly.

types of tenant

It is quite possible to turn large homes into multiple smaller apartment units (according to local zoning laws) that are ideal for students. You do not want to do this however in an area that is geared towards family homes and won’t be friendly or tolerant of college students. Design the rentals according to the market you are attempting to attract.

Unsure? Again thats where Brentwood Lettings can help you, we have helped literally thousands of tenants, from all walks of life find a home in Manchester. We can tell you, the investor, more about your property, its chances of securing good quality tenants, the type of tenants you’d be attracting and how to best present your property for rental.

 

 

 Don’t be greedy.

The goal of owning rental properties is of course, to make money. At the same time if your price your properties too high you will find that they sit empty more often than not. Every month that your property is empty is a month that you aren’t making money on that property at best and a month that you are losing money at worst.

Know the market.

Study the local market for buying real estate and renting real estate. This will help with many things, not the least of which is determining whether or not any given property will make an attractive rental unit. Another thing it will help you determine is how much rent the units you are considering can bring in month after month.

 

When renting properties you need to keep your eye on the long-term goals rather than shortsighted goals.

Property rental is a marathon rather than a sprint with the greatest profits coming at the end. You will want to pay as little interest on the property as possible and pay the property off as quickly as possible in order to realize the maximum profit potential and acquire new properties. The real money when renting properties as a real estate investment isn’t in renting out one or two units but twenty or thirty. The more rental properties you own the more money you stand to make from owning them.

£13.8bn – The Value of The North Manchester Property Market

“How Much Would it Cost To Buy All The Houses and Flats in North Manchester?”

This fascinating question was posed by the 11-year-old son of one of my landlords when they both popped into my offices. At the time I didn’t have an answer for him, instead throwing my hands in the air I smiled and vaguely answered “hundreds of millions”. I hadn’t ever thought about the total value of the market, so I thought to myself that it would be interesting to sit down and calculate what the total value of all the properties in North Manchester are worth.

Now this isn’t something that you can just google lightly and ping receive an answer, you can readily find information on house prices and trends, you can find population data on a city wide basis and lots of vague demographics dotted around, but nothing readily prepackaged to tell you 1) how many houses are in an area and 2) what the values of those houses are. It took me considerably more work than I first anticipated and became a bit of a mission for me to solve this problem.

I started with the city council, then went to the office for national statistics, then pulled census data and land registry files. I quickly found myself with reams upon reams of data which all gave lots of clues, but no definitive answer.

When I delved into the numbers, the first thing I found was that the average price currently being paid for a North Manchester property stands at £99,229.  Which seemed a little low, so I split the property market down into individual property types in North Manchester; the average numbers come out like this.

 

Curious as to how the figure settled at £99,229 I then looked at the distribution of the types of homes in North Manchester, and found this:

 

Working out of Moston, and area heavily packed with street upon street of terraced houses, I wasn’t too surprised to see terraced houses dominating the statistics for North Manchester. However, what was initially surprising was the figure for the number of flats.

I initially wrote this figure off as being inflated by bedsits, converted homes, flats above shops and some of the larger mixed use commercial buildings. However, I chose to dig a little deeper into the distribution of the types of flats in North Manchester and this is what I found:

 

Although, from working in the North Manchester property market for the best part of my life, I did appreciate there were a fair number of flats, I hadn’t until now got my head around the fact that there were just shy of 28,000 flat in the area, of which over 24,500 were within custom built blocks or tenements.

 

A cool £2.1bn could bag you ALL of the flats in North Manchester. Sitting at the lowest price point the local flats are offering astounding returns on investment as rental properties and are in very high demand with the young professional market.

If you happen to be a multi billionaire, check down the back of your sofa, in that pair of jeans that you don’t wear but are hanging onto incase they fit again or in an old coat pocket- if you happen to find a spare £2.1bn give us a call and we’ll talk about investments.

If you’re not a multi billionaire, and like me you’re just a regular person trying to save for the future and provide security for your family this information may seem pie in the sky, but I promise there is a point to it all.

What does this all mean for North Manchester Investors?  

Well as we enter the unchartered waters of 2017 and beyond, even though property values are already declining in certain parts of the London property market, the outlook in North Manchester remains relatively good as over the last five years, the local property market was a lot more sensible than central London’s.

North Manchester house values will remain resilient for several reasons.  Firstly, demand for rental property remains strong with continued immigration and population growth.  Secondly, with 0.25 per cent interest rates, borrowing has never been so cheap and finally the simple lack of new house building in North Manchester not keeping up with current demand, let alone eating into years and years of under investment – means only one thing – yes it might be a bit of a bumpy ride over the next 12 to 24 months but, in the medium term, property ownership and property investment in North Manchester has always, and will always, ride out the storm.

 

How the EU Referendum is Affecting Manchester Property Prices

The UK’s referendum on whether the country should remain a part of the European Union or leave, which took place at the end of June, has had far-reaching effects in many sectors, and recent figures reveal it’s impacting on property prices throughout the country. Fifty-two percent of those who voted chose to vote Leave, dividing the country, as well as towns, families and neighbourhoods. The long-term effects are still not known, but it appears areas where people voted to leave the EU have been hit hardest in terms of the property market. In fact, of the 47 cities and towns that experienced falling house prices just after the referendum, around 85% voted Leave.

In the year leading up to the referendum, England property prices rose by just over 9% on average. However, figures from July – the first full month after the referendum – revealed that the month-on-month rise had fallen to a far lower 0.4%. The referendum appears to have affected different parts of the country to varying degrees, with many analysts noting that areas that voted to leave the European Union have tended to suffer the most dramatic falls in property prices. While Manchester voted to remain in the EU, some parts of the region voted to leave. These Brexit supporting towns and districts have been the hardest hit by the slow down in house price rises.

Government data reveals that property prices in 47 cities and towns actually dropped immediately after the referendum, and a staggering 40 of these places were among those that voted to exit the EU. One such example is Rochdale, part of Greater Manchester. Rochdale residents voted in favour of leaving the Union, and the town saw a drop in average house prices of over £1,200 in the month after the vote. Similarly, Bury, where just over half of local residents voted in favour of leaving the EU, the average house fell in price by over £1,100.

The government figures also revealed that 278 towns and cities covered by their research saw house prices rise or stay at the same level as before the vote. Of these 278, just 74% had voted to leave the EU. As well as Manchester itself, places such as Stockport and Trafford also voted Remain. All three experienced house price increases in July – £2,222 in Manchester, an impressive £4,000 in Stockport, and £1,344 in Trafford.

The Brexit supporting districts and towns surrounding Manchester may have experienced some falls in property prices in the aftermath of the referendum, but data reveals that it was the north-east of the country that was hit hardest by falling prices. For example, Ribble Valley returned a vote for Leave in the referendum and saw prices drop by nearly £8,000.

Analysts and property industry experts generally believe it is too early to assess what the long-term impact of the referendum result will be, but many are in agreement that those areas that have been hardest hit have so far tended to be those that voted to leave the European Union. Many property experts believe it is likely that house prices will fall in 2017, eventually possibly recovering in the following year.

If you are currently looking to enter the rental property market as a landlord, it’s important to choose your location carefully. This is often fairly straightforward if you live in or near the area you’re planning to buy in, but it can be very difficult if you’re looking further afield for a rental property. The area you choose to buy in will of course depend on your budget and on your target rental market, and while the impact of the referendum result is yet to be fully understood, it’s worth bearing in mind that there might be a fall in EU migrants in the coming months and years. If you were planning to buy in an area with a high proportion of EU workers – for example, near a large hospital where many of the staff are migrant workers – it’s worth bearing in mind that competition among landlords may heat up in the near future. The most sensible course of action is to follow property news – both national and local – and ensure you’re fully informed before you take the plunge.

Becoming a landlord can be an extremely lucrative decision, and property remains one of the best and safest ways to invest. Keeping abreast of Moston property news, and all the local property market developments, will enable you to make the best decisions and enjoy the maximum returns on your investment.

Buy-to-let Mortgages: Bad and Good News

Telegraph Money has been highlighting the plight of buy-to-let investors who have mortgages from lenders that are no longer in business. Many of these mortgages are at uncompetitive rates and the borrowers are at risk of being stuck with them for life, thanks to much stricter lending rules being brought in by the Bank of England.

Elsewhere on this site we’ve discussed the impact of these rules, but this is a new light on a possibly unintended – and certainly undesirable – effect of the stringent new lending regime which the Bank has imposed.

To be fair, the Bank has clearly said that the new regulations should not be imposed on borrowers with existing mortgages who only want to switch to a new deal and don’t want to increase the size of their loan.

Unfortunately, lenders are already making it clear that they don’t want to take on borrowers who can’t meet the new lending criteria, even if they are only looking for a remortgage of their existing borrowing.

This could mean that thousands of borrowers can’t get off the high rates that they are on, when getting off these rates could mitigate the effect of the higher taxes that there are also having to bear on their buy-to-let income.

Telegraph Money spoke to Nationwide, who are the second-biggest buy-to-let lender. Nationwide told them that it isn’t accepting remortgage business from other lenders unless the loan meets the new, more stringent regulations put in place by the Bank of England. It has increased its threshold for the amount that landlords need to have in income. They are now going to need to be getting 145% of their mortgage costs in rent. For years, this percentage was 125%.

Lloyds is the biggest buy-to-let lender and as yet it is remaining tight-lipped over whether borrowers who are seeking a remortgage out of a higher interest rate from another lender, will be allowed to apply under the previous criteria. Apparently, Lloyds is monitoring the market and keeping its policy under review so that it can ensure that borrowers have enough protection.

Luckily, the buy-to-let mortgage market is a diverse one as some of the landlords involved in M9 lettings can testify. Some of the smaller lenders appear to be having a rethink about their lending policies. Barclays and Yorkshire building society are both reviewing their attitude towards people who are remortgaging – until recently they would have allowed these mortgages through on the previous terms.

Simon Checkley, from Private Finance, a firm of mortgage brokers, is reported as saying that the Bank of England has actually allowed lenders to accept customers who want to remortgage from other firms. He’s hoping that lenders will take up this opportunity.

The buy-to-let borrowers who are in the worst position are those with loans from mortgage companies that are no longer in the mortgage market. These companies include Cheltenham and Gloucester and Mortgage Express. These customers cannot get a new deal with their existing lender and if larger lenders are put off lending to them by the Bank of England restrictions, these borrowers are stuck with the loans they’ve got. The real problems are tending to occur when borrowers who took out a mortgage on a fixed-rate deal get to the end of the fixed-rate term and are transferred by the lender to a standard variable rate. Many of them will find that they are paying well in excess of 5%. This is much higher than the rates on offer for borrowers who can meet the new, stricter criteria for lending.

In effect, these people are therefore mortgage prisoners. So is there any good news at all on the buy to let mortgage front? Well yes there is, actually.

One of the specialist lenders, Together, has cut its rates on buy-to-let mortgages so they are now below 7% on loan-to-value ratios of up to 65%. They’ve also announced a new fixed-rate five-year buy-to-let mortgage and upped the maximum amount they will lend to £500,000.

They pride themselves on not using the “computer says no” approach to landlords that is so common among other lenders. They say that a big part of their success in marketing buy-to-let mortgages has been that they acknowledge that no two borrowers are the same.

So when it comes to mortgages in the buy to let market, there’s good news and bad news – but when was that ever not true?

A Quarter of Landlords Want Out Because of Tax Changes

The Telegraph reported this week that 25% of buy-to-let landlords intend to sell the properties they are currently renting out, because of the government’s campaign of swingeing tax increases in the sector.

Unintended Consequences of the Tax Grab

This news has caused alarm not just in rental circles but throughout the professional property market, because such a large volume of property hitting the market at the same time could destabilise the entire sector. Another factor here is that rental properties are often concentrated in certain areas. Many landlords favour terraced or semi detached houses in reasonably modest areas because the prices are lower but rents are still reasonable, giving a workable investment yield.

The property market is always essentially local, as landlord advice in Manchester shows. In a local area, a large number of buy-to-let landlords selling up at the same time will definitely affect house prices. In fact if landlords feel that they need to beat a rush to market they will get in early and market their properties at higher prices, hoping to avoid a stampede of rental properties on the market once the buying season starts in spring.

The other undesirable effect of a wholesale dumping of buy-to-let investments will be that rents will rocket upwards because the property being sold will not be bought by other investors but by homeowners. This will remove large amounts of rental property from the market and cause major problems for those tenants who simply do not have the option to buy a property. As a result, the demand for council properties will almost certainly increase.

Nearly 1,000 experienced buy-to-let landlords were surveyed by the Residential Landlords’ Association and the results were pretty staggering. Almost 25% have either already sold their properties or are planning to sell them as a result of the government’s decision to stop mortgage interest being offset against rental income when landlords are working out their taxes.

The draconian changes to taxes on rental income were announced in the 2015 budget but will not come into effect until next year. The tax changes are hardest on those landlords who pay tax at the higher rates (40% or 45%) and those who have bigger mortgages. Taxpayers who aren’t on the higher rates so far, may find that because their taxable income has gone up, they are transferred into a higher rate tax band, a double whammy.

Tenants to Bear the Brunt

Tenants are going to bear the brunt of the new tax regime – not only will they find that there are far fewer rental properties around, but those that remain will be at significantly higher rents. The reduction in supply will of course mean that since demand is still constant, rents on available properties will rise, and landlords will need to make more from their property in order to get a yield that makes the investment sensible.

In fact a previous study found that nearly 60% of landlords were intending to increase their rental charges to offset the loss in income caused by the tax changes. Kent Reliance building society carried out a survey in June that found that landlords planning to increase rents were looking at an average figure of 5.6%.

Each Year Will See Further Effects

The tax changes are not coming in all at once one but are being phased in over a number of years and won’t be fully implemented until 2020. Therefore we should be able to see the effect that the changes are having year-on-year. Any changes in the first year in terms of landlords selling their properties and tenants finding that rents are rising can be expected to be magnified in every year that follows.

And the Icing on the Cake…

The detrimental effects on tenants and on local property markets described above, will be magnified by the sneaky new rules that state that when a lender offers a loan on a buy-to-let property, to a landlord who owns four or more properties, the lender will have to financially assess their entire portfolio.

The official reason given for this is that the more properties a landlord owns, the higher their mortgage arrears are likely to be. The actual effect will be that lenders will make fewer loans to landlords who own multiple properties, so the few landlords left in the game will not be able to buy new property.

It’s no way to run a housing policy.

Renting in One of Manchester’s Best Up-and-Coming Suburbs

Located just three miles away from the cosmopolitan city centre of Manchester, the area of Blackley offers a number of attractions for renters and the Blackley rental market is buoyant. It offers excellent public transport services, as well as strong road links to Manchester itself, neighbouring towns and villages, and the rest of the north west. Blackley has long been popular with renters of all ages, despite its sometimes slightly dubious reputation. Thanks to several new developments, including a variety of contemporary apartment buildings, Blackley will continue to appeal to renters and landlords alike well into the future.

Who Rents in Blackley?

Blackley is a diverse community with young families, couples, older families and retirees all living side by side. It has traditionally appealed to those who want to be close to the attractions of Manchester city centre, but who are either priced out of the centre itself or don’t want to live in the heart of the city. Blackley is popular with those who work or study in the city, and offers a number of different housing options to renters, including traditional red brick terraces, modern semi detached houses, contemporary apartments or smaller studio properties. As the area boasts such excellent public transport links, it is not necessary for those who live in the district to own a car, opening up the possibility of a far wider variety of potential renters.

Excellent Public Transport and Road Links

Blackley is serviced by a number of popular and busy bus routes, which offer frequent and quick journeys into the city centre. The area also enjoys strong links with other towns and villages on the Manchester outskirts, making it perfect for commuters who work all over the north of the city or in the city centre itself. Blackley is also served by the region’s popular Metrolink tram system, providing a convenient alternative to bus routes. Popular destinations such as Altrincham and Bury are easily reached via the excellent Metrolink network, as well as, of course, Manchester city centre.

The formidable M60 is within easy reach of Blackley, and actually acts as a border to the area. Located to the north of Blackley’s residential areas, the M60 provides quick and easy access to the rest of the north west region. Manchester city centre is also only a short drive from Blackley, although many regular commuters prefer to rely on bus or tram services to avoid getting stuck in busy traffic at peak travel times.

Blackley for Families

Blackley offers many attractions to families looking to rent in the area. It’s extremely conveniently situated for access to Manchester city centre, but also offers a number of amenities that will appeal to those with children of all ages. Blackley has several attractive parks, perfect for children to let off steam. The green spaces at Tweedale Common, Irk Valley and Nutbank Common are all within easy reach, as well as the locally famous Boggart Hole Clough. Offering a number of popular and enjoyable walks, Boggart Hole Clough has recently undergone an extensive programme of improvements to increase its appeal to local families and residents. The green and pleasant park has a variety of sports facilities, including tennis and basketball courts, as well as popular football pitches. The park hosts events throughout the year, some of which attract a large number of people from the surrounding areas. As well as firework displays each Guy Fawkes Night, the park also hosts summer family fun days designed to appeal to kids of all ages.

Blackley Amenities

Blackley has its own golf club and cricket club, both of which are well established and are great social hubs. The area is also well served by shops, including local independent retailers as well as famous high street chains. You’ll also find an impressive indoor market, and a modern and popular library.

Blackley Property

Traditional red brick terraces in various states of repair can be snapped up for as little as £60,000, but such bargains are becoming increasingly difficult to find. At the other end of the house market, it’s not unusual to see prices of around £300,000 and above for brand new semi and detached homes. These properties are attracting a new type of renter and homeowner to Blackley, and look set to enhance the reputation and appeal of the area over time. Luxury and modern apartments in the area can be found for less than £100,000, and the big appeal of these for landlords is that they will not generally need any work before they can be rented out, and they also tend to be fairly easy to market.

Urbanbubble appointed to two new developments

Urbanbubble appointed to two new developments


The Manchester-based firm has been appointed to The Crescent in Salford and the Ironworks in Leeds.

The-Crescent A CGI of how the development will look once complete

Residential property management company, urbanbubble, has been appointed to two new developments.

The Manchester-based firm has been appointed to The Crescent, Salford, a 405 private rented sector (PRS) apartment scheme at the site of the former Black Horse Hotel, which is being developed by Property (Done).

It has also been appointed to Ironworks, a multi-purpose development at Holbeck Urban Village, Leeds.

Michael Howard, managing director, urbanbubble said: “The new appointments are a fantastic start to the year. I am thrilled our hard work over the past few years in understanding the specific challenges and requirements involved in managing PRS schemes is now coming to fruition with the appointment to manage The Crescent.

“I’m very pleased we won the Ironworks management contract and it is a great credit to the whole team at urbanbubble we are adding such high profile and significant developments to our portfolio.”

Last year urbanbubble was appointed to manage Trinity, the sister development to The Crescent.

Simon Ismail, director at Property (Done), said: “I’ve been working closely with urbanbubble on the Trinity development and it made complete sense to bring them on board for The Crescent.

“Their reputation for traditional block management is second to none and we know they will offer a fantastic service to the occupiers at both Trinity and The Crescent.”

Urbanbubble, based at Sevendale House, is a residential property managing agent, which was set up by Michael in 2008.

The company looks after 90 residential estates with 6,000 homes in the north west.

The team of 66 full time colleagues provide a range of services to developers, landlords and residents.

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