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  • Property Yields

    High yield strategy - invest North or South?



    Having a chat with a few landlord friends at dinner last night... had an interesting debate.

    Better strategy out of ...

    Higher yield properties up north?

    Or

    Higher yield less desireable properties down south... ie above shops, non standard construction.

    We are all greater london landlords and the average yields we get atm are 4% or lower.

    Up north or less desirable southerns on the face of it can yield 6% plus easily.

    South positives

    Closer so easier to keep an eye on

    Areas we know already

    South Negatives

    Max 60% ltv and smaller pool of lenders so higher rates

    Capital appreciation seems to be lower

    Higher tenant turnover

    Higher buildings insurance

    North positives

    Better capital growth potential

    Cheaper standard mortgages

    Houses instead of flats

    North Negatives

    Far away so need to be managed

    Maybe missed the boat for capital growth in manchester birmingham leeds etc

    Any thoughts or pros and cons i have missed?

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    This is a great topic for discussion and here are some previous related threads:

    Why higher value properties are better

    Cheap Houses in North-West: Dangerous? 

    For what it is worth, I have always found that our southern stock has better quality tenants, less tenant turnover, and higher capital growth and has been easy to sell.  However, when we put our 4 bed house on the market in Manchester around 2 years ago, we didn't get a single viewing, so we've kept it.

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    Why did you put "houses instead of flats" as a positive? Just curios.

    Cheers!

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    No freeholder or management co to deal with

    No lease which shortens every year

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    Management companies and freeholders can be a positive or a negative

     Economies of scale sometimes with major works and they project manage for you

    They can add value with things like new windows / doors

    If the roof leaks  in the storms like  last week you are not arranging the scaffolding to go up the next day

    Short leases also provide an opportunity to buy  below MV and extend the lease

    Make 10K  for some extra paperwork is an opportunity to capitalise on someones elses laziness


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    Jonathan Clarke. http://www.buytoletmk.com

    Valid point indeed. For me low leases are always worth looking at, especially if there is a chance of getting the FH. For example buying a flat in a block of 2, which is I what I done and now own both. We can now do extend, push for RTM or buy FH.

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    The simple answer is Purchase in the area you understand best

    The North is fine but like every thing else Know your area

    I could show you fantastic deals in the NE which look super But I could pull the wool over an investors eyes  quite easily and sell them a dud


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Know your area is very important. It is very risky going to places you don’t know and you can end up with a lemon.

    Maybe it should be highlighted that UK does not only have South and North, prices are different in Southampton compared to Brighton, their are also The midlands, Wales and Cornwall.

    I am a SE LL with more properties outside SE as yield is just poor.

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    Holiday lets are doing very well on yields according to this latest news:

    New research from holiday property fund, Second Estates, has revealed that providing owners with yields of 11.7% over the past twelve months, Wales has been crowned the best area for holiday lets followed by Northumberland where investors saw yields of 11.5%.

    Full/source article

    See our comprehensive guide: Guide to sourcing & setting up a holiday let

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    When the down turn happens your northern properties will fall in price much more than the southern properties.

    Also northern properties will see an increase in rent arrears.- which is already happening.

    Similar dinner story years ago when everyone wanted to be in the lloyds market- everyone when bust. As I have said before the property game is over for this cycle and will be much cheaper over the next 2/3 years.

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    Your correct the North falls faster and recovers slowly

    But I believe we will see a levelling off on all areas going forward

    Its not in anyone's interest to have property prices rising fast It hs to be slowly slowly from here

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.