X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Property Yields

    BTL in Portland, Dorset

    Hello,

    I am a second time Buy-to-Let investor. I am looking to invest on a 119k property in Portland, ROI 11.5%. Tenant pays 750£pcm.

    Need advice on 1) Portland good area to invest? 2) new development with phase 2 coming soon. Will this depreciate my property or help long term appreciation? 3) is 11.5% a good yield in current market?

    Thanks

    Rekha

    0
    0

    Hi Rekha,

    Based on your figures of £750pcm rent and £119,000 purchase price, I calculate this as a 7.6% gross yield. I'm not quite sure how you have calculated your 11.5% ROI - perhaps including either leverage or expected capital gain?

    According to our data, Isle of Portland typically has 6.7% gross yield for 1-bed properties and 4.3% gross yield for 2-bed properties, so I'd say your yield looks good for the area.

    Capital growth in the area has been roughly flat in the last year, but 8% in the last 3 years and 24% in the last 5 years.

    Hope that helps!

    Michael

    0
    0

    Michael Dent
    Landlord and Founder of PropertyData.co.uk
    Believer in a data-driven approach to property investing

    Thanks Michael Smile

    Well I have included in expenses, 1000£ service/Ground rent, 2.69% interest for 5 years fixed; minus agent management fee for 10%; fees for solicitors/mortgage broker etc..Total money from hand is £35,386.

    Which brings ROI to 11.5%.

    Thanks for your reply.

    There is also an issue that the developer will not give a guarantee and there is only an architects guarantee which it seems limits the pool of lenders.

    Do you know of anything about this issue?

    Regards

    Rekha

    0
    0

    Yes that makes sense - 11.5% is your cash ROI then.

    I'm not an expert in new builds, but the usual 10-year NHBC warranty is one of the perks of buying a new-build - there is almost inevitably some snagging work needed in the first 1-2 years - so no developer guarantee is a possible red flag. Lenders are experienced and work with lots of data, so if they are wary about something, it's normally sensible to take note!

    0
    0

    Michael Dent
    Landlord and Founder of PropertyData.co.uk
    Believer in a data-driven approach to property investing

    Ahhhh, Portland is one of my favourite places ... EVER!  I love this quirky little isle.  We have had a holiday home there since 2009.

    Portland has always been viewed as the poor sister of Weymouth.  Property prices in Weymouth are significantly higher.  Portland has struggled to shrug off its naval past, but it is succeeding.  Property still represents good value for money and the Portland stone cottages are very desirable.

    Portland is a mecca for water sports and hosted the 2012 Olympic Games sailing.  It has world class marina facilities and cruise ships have started coming into the harbour - I was told recently that 40 are booked for this year.

    There is a surprisingly wide variety of property on Portland ranging from Portland stone cottages with walls 3 feet thick, to modern town houses with eco credentials.

    Our house is in Easton, which I believe is the most desirable village on the island.  It has all the usual amenities you need including a Co-op and a large Tesco tucked away around the back, and there are a number of charming cafes and eateries as well as boutique shops.  It really is a lovely place.

    Most people know Portland for The Bill, but it is so much more than that.  It is a birdwatcher's paradise and has many stunning walks around the cliffs.

    Some areas are quite poor with old council housing stock, but more and more new build developments are being built and they are raising prices.  Most benefit from wonderful sea views of the rugged coast.

    I think Portland is great for holiday lets but for standard BTL I am not entirely sure of the tenant demographic.  There will be local families, workers who commute to Weymouth, retirees, and people associated with the marine industry.  Sunseeker Yachts have a huge facility in the marina.

    Things have definitely improved in Portland over the years largely due to the marina complex and more and more water-based businesses coming to use the harbour and the facilities.

    I think Portland will become increasingly desirable for second homes and prices have risen steadily over the years.

    We paid £225K for our four bed town house with sea views and I now estimate it to be worth around the £280K mark, which is in keeping with Michael's figures.

    The quality of housing stock is definitely improving with some very nice developments.  If you are going to buy in Portland, you would have to buy a property with a sea view. It would be rude not to!

    0
    0

    Thank you so much for your reply.

    I am a bit worried bcause Fox and Sons, they dont seem to know who the developer is or who the architect is for this build; They seem confident about getting 750£ rent

    but another agent could not commit more than 650£ for the same!

    Its our dream to own a property sea facing...lets see Smile

    Do keep in touch.

    Regards

    Rekha

    0
    0

    It sounds like you need to do further DD or find a different property.

    Also £750.00 sounds on the high side to me.  I would work your numbers on the £650pcm rent, just to be on the safe side.

    0
    0