Step-by-Step Instructions to U.K. Property & Passive Income
A Note from the Author:
This presentation is composed over 2 years of study with the help of a group of over 150 investors.
The purpose of this document is to document the process of a how a beginner can start the journey of property investing.
This guide is serve to provide a guideline of the basic steps to property study.
During the writing of this guide, the author is testing his knowledge based on the U.K Property market during the Brexit. It is certain that opportunities are coming from market swings, political situations as well exchange rates investor can benefit from.
The depth of knowledge building up from investor community, sharing of knowledge is of even higher importance to speed up learning and avoid other peoples mistake.
Without the help from 150+ members of our U.K Property Group , all these info available to you is never possible. And I never walk so far to share you my knowledge.
This presentation is composed over 2 years of study with the help of a group of over 150 investors.
The purpose of this document is to document the process of a how a beginner can start the journey of property investing.
This guide is serve to provide a guideline of the basic steps to property study.
During the writing of this guide, the author is testing his knowledge based on the U.K Property market during the Brexit. It is certain that opportunities are coming from market swings, political situations as well exchange rates investor can benefit from.
The depth of knowledge building up from investor community, sharing of knowledge is of even higher importance to speed up learning and avoid other peoples mistake.
Without the help from 150+ members of our U.K Property Group , all these info available to you is never possible. And I never walk so far to share you my knowledge.
5 steps to start your research (Always ask questions to yourself):
1. Ask yourself Why U.K?
My answer:
- It is small & much densely populated compared to any other developed countries say USA. Canada, China or any other European countries
- The law is in English. If I were to invest in other countries, I would have difficulty understanding what I m signing, say Japan, Malaysia, Spain, Greek
- It is the same law system Hong Kong, Singapore, Australia, USA inherited. I feel safe.
2. Ask yourself - What do you want?
My answer: Pick 3 areas to study
- How I started is. First I look at property value of different region I could afford at http://www.rightmove.co.uk/. I suggest you first start with northern region like Leeds, Manchester, Liverpool to start your research.
- for beginner budget, (say 70K), I would look at Bradford, Liverpool and Scotland
3. Ask yourself - What is a good return?
My anwer: Compare ROI
- In terms of ROI, we are looking at monthly cashflow, meaning after deduction of all expenses, you should have a positive cashflow into your pocket
- Then I look whether the region is promising with future development. E.g.Railway. Train station. Like the High Speed 2
- Then I will see if there is enough property for me to select from (you should at least target an area with 100 properties within your price range). If not enough property, you can't get a good price.
4. Ask yourself - How can I compare?
My answer: Property Price vs Rental Price
- use Rightmove to search the same area with similar setting to calculate the ROI
- e.g. a property price of £50,000 with a monthly rental of £400 = 400 x 12 / 50,000 = 9.6%. we aim for something about 10% in U.K.
5. Ask yourself - What's next?
My answer: Call up a few agents
- They are paid to answer questions, Don't be shy!
- I ask them what property size is in highest demand ( 2room, 3room?) student or professional
- Then I choose the one that's most helpful and try to meet them.
Then GO U.K and take a look!
1. Ask yourself Why U.K?
My answer:
- It is small & much densely populated compared to any other developed countries say USA. Canada, China or any other European countries
- The law is in English. If I were to invest in other countries, I would have difficulty understanding what I m signing, say Japan, Malaysia, Spain, Greek
- It is the same law system Hong Kong, Singapore, Australia, USA inherited. I feel safe.
2. Ask yourself - What do you want?
My answer: Pick 3 areas to study
- How I started is. First I look at property value of different region I could afford at http://www.rightmove.co.uk/. I suggest you first start with northern region like Leeds, Manchester, Liverpool to start your research.
- for beginner budget, (say 70K), I would look at Bradford, Liverpool and Scotland
3. Ask yourself - What is a good return?
My anwer: Compare ROI
- In terms of ROI, we are looking at monthly cashflow, meaning after deduction of all expenses, you should have a positive cashflow into your pocket
- Then I look whether the region is promising with future development. E.g.Railway. Train station. Like the High Speed 2
- Then I will see if there is enough property for me to select from (you should at least target an area with 100 properties within your price range). If not enough property, you can't get a good price.
4. Ask yourself - How can I compare?
My answer: Property Price vs Rental Price
- use Rightmove to search the same area with similar setting to calculate the ROI
- e.g. a property price of £50,000 with a monthly rental of £400 = 400 x 12 / 50,000 = 9.6%. we aim for something about 10% in U.K.
5. Ask yourself - What's next?
My answer: Call up a few agents
- They are paid to answer questions, Don't be shy!
- I ask them what property size is in highest demand ( 2room, 3room?) student or professional
- Then I choose the one that's most helpful and try to meet them.
Then GO U.K and take a look!
Agenda - Some explanations:
Step 1:
- That was my first study documents. I picked 5 towns initially. It's too much work. It is going to drain you. Pick 3.
Step 2:
- I set my goals to bullshit my ways with 3 agents per night. I write it down a my i-phone notes so I make sure I will nail the 3 agents. It is difficult, but you feel satisfied after you do it
Step 3:
- Work the number backwards: We need to target how much we could afford to pay. We set the price, not the seller. For details, go to blog post full calculation example - glasglow-property-winning-qudrant-15000.html
Step 1:
- That was my first study documents. I picked 5 towns initially. It's too much work. It is going to drain you. Pick 3.
Step 2:
- I set my goals to bullshit my ways with 3 agents per night. I write it down a my i-phone notes so I make sure I will nail the 3 agents. It is difficult, but you feel satisfied after you do it
Step 3:
- Work the number backwards: We need to target how much we could afford to pay. We set the price, not the seller. For details, go to blog post full calculation example - glasglow-property-winning-qudrant-15000.html
Background study - Some explanations:
I have also done a basic research about
- the weather
- the transportation
- availability of airports
- population growth
- unemployment rate
I need an overview, a big picture of the country so I feel comfortable to invest in that country.
I have also done a basic research about
- the weather
- the transportation
- availability of airports
- population growth
- unemployment rate
I need an overview, a big picture of the country so I feel comfortable to invest in that country.
Most populous in Western Europe - Some explanations
From my observations, it is important to know that the area must be highly populated so there is a demand for it. For me, U.K has all the reasons, the political environment is relative stable (even with Brexit, i think the system will adjust itself slowly), it is always a very safe and civilized nation. There is a consistent inflow of immigrants, the place is always desirable.
Most important of all, with its small land mass, it is the most populous for sure.
From my observations, it is important to know that the area must be highly populated so there is a demand for it. For me, U.K has all the reasons, the political environment is relative stable (even with Brexit, i think the system will adjust itself slowly), it is always a very safe and civilized nation. There is a consistent inflow of immigrants, the place is always desirable.
Most important of all, with its small land mass, it is the most populous for sure.
Weather conditions - Some explanations:
The weather is very nice during Apr - Sep. I was there for 2 weeks traveling
- London, Richmond (4 days)
- Barnsley, Leeds, Bradford, Wakefield, (5 days)
- Liverpool, Warrington ( 3 days)
My next trip will be April, 2018 to further understand the area and to build more network.
I would visit Leeds, Bradford, Barnsley, Warrington and Scotland. If you like to join my tour and explore together, e-mail [email protected].
The weather is very nice during Apr - Sep. I was there for 2 weeks traveling
- London, Richmond (4 days)
- Barnsley, Leeds, Bradford, Wakefield, (5 days)
- Liverpool, Warrington ( 3 days)
My next trip will be April, 2018 to further understand the area and to build more network.
I would visit Leeds, Bradford, Barnsley, Warrington and Scotland. If you like to join my tour and explore together, e-mail [email protected].
Some photos of the place I stay during my property training:
During my 3 days property training in U.K. with my mentor Andy an Australian. I stayed in a host family I found in Airbnb in Richmond. Some pictures below to show you the cozy environment the place i stayed in.
I also stayed in some no as good Airbnb. The key to stay in a comfortable place is to choose a room with the owner also staying in the house.This is a safer bet to get more comfortable during your stay
I also stayed in some no as good Airbnb. The key to stay in a comfortable place is to choose a room with the owner also staying in the house.This is a safer bet to get more comfortable during your stay
U.K Airport - some explanations:
The air traffic is a good indication of how busy the area is, so I would check out the stat.
The air traffic is a good indication of how busy the area is, so I would check out the stat.
U. K. Airports - some explanations:
I would believe that proximity to the airport would be a choice for investment because of the large no. of jobs available at the airport.
More sharing will be available upon more information.
I would believe that proximity to the airport would be a choice for investment because of the large no. of jobs available at the airport.
More sharing will be available upon more information.
U. K. Airports - some explanations:
As previous slide...
As previous slide...
University ranking - some explanations:
I like to repeat the ranking because the slide may not be clear when enlarged.
Ranking as follows:
1. Cambridge
2. Oxford
3. London School of Economics
4. Imperial College London
5. Durham
6. St. Andrews
7. Warwick
8. Surrey
9. Lancaster
10. Exeter
11. Bath
11. Loughborough
13. University College London
14. Southampton
15. Bristol
16. East Anglia
17. York
18.Birmingham
19. Leeds
20. Edinburgh
As an investor, we should look at different angles of what is happening in the market to get the big picture and understand different opportunity. I would look at every opportunity in the area and student's accommodation is a big market,as many overseas parents would send their children for higher education and U.K. is definitely high on the list.
For student accommodations, we might be looking at HMO where a couple of students may share a communal area, kitchen and bathroom. The design shall be modern so they feel that they are living among the trendy area.
If you have already invested in student accommodations. Do share with us what you did at our blog post (link). I m sure we can learn a lot from sharing and making comments!
I like to repeat the ranking because the slide may not be clear when enlarged.
Ranking as follows:
1. Cambridge
2. Oxford
3. London School of Economics
4. Imperial College London
5. Durham
6. St. Andrews
7. Warwick
8. Surrey
9. Lancaster
10. Exeter
11. Bath
11. Loughborough
13. University College London
14. Southampton
15. Bristol
16. East Anglia
17. York
18.Birmingham
19. Leeds
20. Edinburgh
As an investor, we should look at different angles of what is happening in the market to get the big picture and understand different opportunity. I would look at every opportunity in the area and student's accommodation is a big market,as many overseas parents would send their children for higher education and U.K. is definitely high on the list.
For student accommodations, we might be looking at HMO where a couple of students may share a communal area, kitchen and bathroom. The design shall be modern so they feel that they are living among the trendy area.
If you have already invested in student accommodations. Do share with us what you did at our blog post (link). I m sure we can learn a lot from sharing and making comments!
Population Growth - some explanations
A simple indicator to understand whether the property price will be going up or down. I m sure population and upcoming development will decide that.
A simple indicator to understand whether the property price will be going up or down. I m sure population and upcoming development will decide that.
Map by regions - some explanations:
It is important to know U.K by its region, it will often come up in your discussions with others about U.K.
It is important to know U.K by its region, it will often come up in your discussions with others about U.K.
Have a look at these websites - some explanations
These are very valuable source of information:
www.rightmove.co.uk - you can find properties for sale and for rent. It can also find you SOLD prices nearby. It is a great website to do your research.Highly Recommended Website
www.home.co.uk - shows you the asking price of the property overtime, sold prices nearby and the price compares to the average price of the area. Highly Recommended Website
www.nethouseprices.co.uk - shows all the SOLD property in that post code & the property price change overtime against average house price in the area
www.ourproperty.co.uk - show you the pass SOLD prices of the post code you are searching for, with data tracking back to 1995
www.sspc.co.uk - home for sale in Scotland
Personal note:
I would use rightmove.co.uk all the time and create a daily alert for the area I m interested in - Bradford (link)
This is what I do
About Bradford
At the 2011 UK census, Bradford had a population of 522,452. There were 106,680 households in Bradford, and the population density was 4,560 inhabitants per square kilometre (11,820/sq mi). For every 100 females, there were 92.9 males. Bradford has the youngest, fastest growing population outside London.
The census showed that of Bradford's total population, 67.44% (352,317) was White, 26.83% (140,149) Asian, 2.48% (12,979) Mixed Race, 1.77% (9,267) Black and 1.48% (7,740) from other races.
22.1% of the population are British Asian (included in the 26.83% "Asian" figure above), the third-highest percentage of South Asians in a single settlement in England and Wales (behind the city of Leicester at 29.9% and the London Borough of Tower Hamlets). Nearly half of all Asians living in Yorkshire and the Humber live in Bradford, with the central wards of Bradford Moor, City, Little Horton, Manningham and Toller having large majority Asian populations, whereas outlying wards of Bradford such as Thornton and Allerton, Idle and Thackley, Eccleshill, Wibsey, Wyke, Clayton, Wrose, Tong and Royds have predominantly white populations.
More info about Bradford in Wikepedia
These are very valuable source of information:
www.rightmove.co.uk - you can find properties for sale and for rent. It can also find you SOLD prices nearby. It is a great website to do your research.Highly Recommended Website
www.home.co.uk - shows you the asking price of the property overtime, sold prices nearby and the price compares to the average price of the area. Highly Recommended Website
www.nethouseprices.co.uk - shows all the SOLD property in that post code & the property price change overtime against average house price in the area
www.ourproperty.co.uk - show you the pass SOLD prices of the post code you are searching for, with data tracking back to 1995
www.sspc.co.uk - home for sale in Scotland
Personal note:
I would use rightmove.co.uk all the time and create a daily alert for the area I m interested in - Bradford (link)
This is what I do
- I m monitoring a particular area I m interested in Bradford - BD1 and BD4 under £80,000.
- The reason I set it below £80,000 because the minimum mortgage amount is £50,000, if you work backwards, you will need to find a property of £72,000 to get a mortgage
- I studied Bradford since 2016, the budget is suitable for beginner and it is within 1/2 hr distance to Leeds. Very close to City Center.
- If you study Leeds, you will know that it is the second financial center in U.K. after London. If you travel around the city center, you will see a lot of bankers in the area wearing suit and shirt without a tie, exactly what you notice as in you are in Hong Kong key financial district.
About Bradford
At the 2011 UK census, Bradford had a population of 522,452. There were 106,680 households in Bradford, and the population density was 4,560 inhabitants per square kilometre (11,820/sq mi). For every 100 females, there were 92.9 males. Bradford has the youngest, fastest growing population outside London.
The census showed that of Bradford's total population, 67.44% (352,317) was White, 26.83% (140,149) Asian, 2.48% (12,979) Mixed Race, 1.77% (9,267) Black and 1.48% (7,740) from other races.
22.1% of the population are British Asian (included in the 26.83% "Asian" figure above), the third-highest percentage of South Asians in a single settlement in England and Wales (behind the city of Leicester at 29.9% and the London Borough of Tower Hamlets). Nearly half of all Asians living in Yorkshire and the Humber live in Bradford, with the central wards of Bradford Moor, City, Little Horton, Manningham and Toller having large majority Asian populations, whereas outlying wards of Bradford such as Thornton and Allerton, Idle and Thackley, Eccleshill, Wibsey, Wyke, Clayton, Wrose, Tong and Royds have predominantly white populations.
More info about Bradford in Wikepedia
Buy to let yield - some explanations:
The definition of buy-to-let is buying a property for the purpose of renting out the entire property.
There are also other ways of generating income say multi-lets and HMO (Home of Multiple Occupations).
The area that has a demand of renting an entire home or HMO will be differed by district.
Example: I think the buy to let yield in Bradford is good. Student Accommodation might also be in demand.
However, I do not think there is a demand of HMO for young professionals.
We need to spend time to understand the area ourselves before making hasty decision. As said by Warren Buffett in a interview.
No call strike in business
There is no call strike (in baseball term) in business, meaning that you don't have to swing and you won't be strike out. We can wait (even for 2-3 years) until you understand the business and you like the people and then swing. For full video, you can check out the link
The definition of buy-to-let is buying a property for the purpose of renting out the entire property.
There are also other ways of generating income say multi-lets and HMO (Home of Multiple Occupations).
The area that has a demand of renting an entire home or HMO will be differed by district.
Example: I think the buy to let yield in Bradford is good. Student Accommodation might also be in demand.
However, I do not think there is a demand of HMO for young professionals.
We need to spend time to understand the area ourselves before making hasty decision. As said by Warren Buffett in a interview.
No call strike in business
There is no call strike (in baseball term) in business, meaning that you don't have to swing and you won't be strike out. We can wait (even for 2-3 years) until you understand the business and you like the people and then swing. For full video, you can check out the link
buy to let yield map - some explanations:
The map is referred to is no longer available, but you can refer to another link on totalmoney.com
You can start by looking at areas which is reported by media. It might not be not be all reliable, but at least it gives you somewhere to start.
After my first visit to U.K., I found these figures does make sense with Leeds, Liverpool, Glasglow and Manchester being the key areas for buy-to-let return.
The map is referred to is no longer available, but you can refer to another link on totalmoney.com
You can start by looking at areas which is reported by media. It might not be not be all reliable, but at least it gives you somewhere to start.
After my first visit to U.K., I found these figures does make sense with Leeds, Liverpool, Glasglow and Manchester being the key areas for buy-to-let return.
Winning Postcodes in Northern U.K.- some explanations:
I would first look at the house price then the yield and future developments of those cities.
Initially I keep myself away from Scotland as I can't give myself a good reason why there will be good future commercial developments and for me to pitch my investment to others. I think it would be much easier to understand U.K. say Leeds or Manchester then to start explaining what is so good about Scotland.
The perception isn't there as a start.
Glasgow, Scotland
However, I m now going back to study Glasgow Scotland again as I have recently find a good sourcing agent.
The fact that you could start your first investment with £30,000 is an easier hurdle to overcome and get started.
As I was coming back from a setback from my business, I m slowly recovering and I keep myself motivated as small success can keep you going. I want that small success so I m able to build on my small success to a big one!
If you like more information about Glasgow and sourcing agent, please send e-mail to [email protected]
I would first look at the house price then the yield and future developments of those cities.
Initially I keep myself away from Scotland as I can't give myself a good reason why there will be good future commercial developments and for me to pitch my investment to others. I think it would be much easier to understand U.K. say Leeds or Manchester then to start explaining what is so good about Scotland.
The perception isn't there as a start.
Glasgow, Scotland
However, I m now going back to study Glasgow Scotland again as I have recently find a good sourcing agent.
The fact that you could start your first investment with £30,000 is an easier hurdle to overcome and get started.
As I was coming back from a setback from my business, I m slowly recovering and I keep myself motivated as small success can keep you going. I want that small success so I m able to build on my small success to a big one!
If you like more information about Glasgow and sourcing agent, please send e-mail to [email protected]
buy to let yield: losing city - some explanations:
In case you haven't seen the names clearly, I repeat it here
Low Buy-to-let yield
It is difficult to get good cashflow in the southern part of U.K. because you get people who like to do flips and expect an appreciation in property value.
Due to the constant expectation of value increase and appreciation in value, rent would be difficult to catch up.
People also willing to invest even with a lower rental return as they project an increase in value.
According to Rich Dad, speculation based on things that hasn't happen is called gambling. When we decide to make a purchase, we are sure the number will work out. The only thing that you can guarantee is how much cashflow you get per month.
That's why we would look into the northern part where property value is more stable but the rental return is about 10%. I m going to show you how.
I m not saying that Southern part is not worth investment but it will be different type of strategy.
I m the type of guy who looks for long term return and I will go for monthly cashflow.
This whole website is dedicated to show you how.
In case you haven't seen the names clearly, I repeat it here
- Lichfield near Birmingham
- Chichester near Portsmouth
- Newport near Cardiff
- Exeter at the lower left corner of UK
- Hereford is right under Birmingham
- Bath is near Bristol
- Worcester under Birmingham
- Winchester is close to Portsmouth
- Cambridge is under Birmingham
- St. Albans is next to London
Low Buy-to-let yield
It is difficult to get good cashflow in the southern part of U.K. because you get people who like to do flips and expect an appreciation in property value.
Due to the constant expectation of value increase and appreciation in value, rent would be difficult to catch up.
People also willing to invest even with a lower rental return as they project an increase in value.
According to Rich Dad, speculation based on things that hasn't happen is called gambling. When we decide to make a purchase, we are sure the number will work out. The only thing that you can guarantee is how much cashflow you get per month.
That's why we would look into the northern part where property value is more stable but the rental return is about 10%. I m going to show you how.
I m not saying that Southern part is not worth investment but it will be different type of strategy.
I m the type of guy who looks for long term return and I will go for monthly cashflow.
This whole website is dedicated to show you how.
buy to let yield map (the losing postcodes.....) - some explanations
you will also see it from here that most of the town are in the Southern UK.
They only area that is in the North would be York (Y042) with areas like Pockington, Bamby, Moor, Melbourne and Seaton Ross with a yield of 1.85%
Employment opportunity Feb 2013 - some explanations
Higher employment
you will notice that the best return city are also the cities with poor employment rates. I believe it is natural. If you are progressing with your career as well as financially, you would probably want to own your own house. This is exactly the situation in those cities with better employment opportunity like London, Manchester, Milton Keynes and Cambridge, people are progressing here, they have bigger dreams, they have bigger ambitions. They want more in their life. They would probably want their own home.
I think this part of the reason to explain why cities with higher employment would have a lower yield
Lower employment
On the other hand, people live in those cities with lower employment, might have lower ambitions in their life. It might be more difficult to come up with a deposit to own their own home so they are resorted to renting. As people generally expects value appreciation more than cashflow, People will not notice properties that generate cashflow, they swarm to cities that everyone talks about how much the property has appreciated.
For those cities, the rent will never be able to catch up with mortgage ones needs to pay out. It is negative cashflow from the beginning. So we would invest no matter in the south or the north, it is positive cashflow that we care about.
Most of the students from property training has swarm to Hull. I didn't study the place myself so I will make no comment during the time of my writing.
For more information, please visit www.yauherbert.weebly.com or email to [email protected]
Higher employment
you will notice that the best return city are also the cities with poor employment rates. I believe it is natural. If you are progressing with your career as well as financially, you would probably want to own your own house. This is exactly the situation in those cities with better employment opportunity like London, Manchester, Milton Keynes and Cambridge, people are progressing here, they have bigger dreams, they have bigger ambitions. They want more in their life. They would probably want their own home.
I think this part of the reason to explain why cities with higher employment would have a lower yield
Lower employment
On the other hand, people live in those cities with lower employment, might have lower ambitions in their life. It might be more difficult to come up with a deposit to own their own home so they are resorted to renting. As people generally expects value appreciation more than cashflow, People will not notice properties that generate cashflow, they swarm to cities that everyone talks about how much the property has appreciated.
For those cities, the rent will never be able to catch up with mortgage ones needs to pay out. It is negative cashflow from the beginning. So we would invest no matter in the south or the north, it is positive cashflow that we care about.
Most of the students from property training has swarm to Hull. I didn't study the place myself so I will make no comment during the time of my writing.
For more information, please visit www.yauherbert.weebly.com or email to [email protected]
People moving out of London - some explanations:
From the statistics presented by U.K. government, we can see that starting from 2008/09, there is more people moving out of London including conurbation (for easy study, conurbation means an extended area, typically consisting of several towns merging with the suburbs of a major city) there is more people will moving to rural areas than to London. This posts good signs to investors, as we can read it is a sign of growth in cities outside of London.
From our point of view as an investor in the northern part looking for cashflow, we would be happy to see more people move outside of London.
We are not going to discuss and analyze the reasons of why people are moving, but we can easily interpret the following key factors:
From the statistics presented by U.K. government, we can see that starting from 2008/09, there is more people moving out of London including conurbation (for easy study, conurbation means an extended area, typically consisting of several towns merging with the suburbs of a major city) there is more people will moving to rural areas than to London. This posts good signs to investors, as we can read it is a sign of growth in cities outside of London.
From our point of view as an investor in the northern part looking for cashflow, we would be happy to see more people move outside of London.
We are not going to discuss and analyze the reasons of why people are moving, but we can easily interpret the following key factors:
- Improved living standard
- Job opportunity
- Future development
- Better environment for kids
Moving within U.K.Statistics some explanations:
What the Chart is telling us
Along the x-axis, it is the Annual gain or loss of population ( thousands).
Along the y-axis, it is the calendar year
At the bottom of the chart,it is the annual loss of population in London which I have use an orange arrow and has labelled it "a". You can see that starting 2008/09, London has been losing its ground.
People are moving towards 3 locations
1. I have used orange arrow "b", signifies that people are moving to urban with major conurbation (excluding London).
2. People are also moving to either mainly rural areas and,
3. large rural areas as indicated in the chart above.
These 3 trends we see net increase meaning net decrease in London.
Please leave comment on our blog posts (Power investment blog) and we can continue on with discussion there. If you have any question, you can also e-mail me [email protected]
What the Chart is telling us
Along the x-axis, it is the Annual gain or loss of population ( thousands).
Along the y-axis, it is the calendar year
At the bottom of the chart,it is the annual loss of population in London which I have use an orange arrow and has labelled it "a". You can see that starting 2008/09, London has been losing its ground.
People are moving towards 3 locations
1. I have used orange arrow "b", signifies that people are moving to urban with major conurbation (excluding London).
2. People are also moving to either mainly rural areas and,
3. large rural areas as indicated in the chart above.
These 3 trends we see net increase meaning net decrease in London.
Please leave comment on our blog posts (Power investment blog) and we can continue on with discussion there. If you have any question, you can also e-mail me [email protected]
Population - some explanations:
As mentioned in previous slide, we can see that there will be a net decrease of population in London and people tend to move to other conurbation area (from the map, we could identify Liverpool and Manchester)
From the map on the left, we can notice that people age over 45 are concentrated in urban area and there is more young people living in the rural area. why?
please leave a comment on our blog (link), we would like to hear your opinion about the population change and behaviour.
As mentioned in previous slide, we can see that there will be a net decrease of population in London and people tend to move to other conurbation area (from the map, we could identify Liverpool and Manchester)
From the map on the left, we can notice that people age over 45 are concentrated in urban area and there is more young people living in the rural area. why?
please leave a comment on our blog (link), we would like to hear your opinion about the population change and behaviour.
Job in finance - some explanations:
i would usually look at the finance sector within the area because I think it is an indicator whether the area is strong economically. My first intention was to find out this information with England. My interest was in Leeds as I have read from Wikipedia that Leeds is the second financial Center after London. However, I couldn't find such support here, only Birmingham, Cambridge and Belfast were mentioned.
According to government website, the biggest percentage of finance economy in an area is Scotland. It has accounted for over 13% to which I have overlooked.
I have found that Scotland is an interesting economy because
1. They are the second biggest economy in U.K. after London
2. They have also got a big finance economy which I believe is important because we can see that the world is heavily relying on finance and monetary policy. Finance generate higher income and can help spur the economy.
I would therefore more drawn to study more about Scotland and Gasglow in my further research.
If you have have any comments please leave it in our blog or send me a mail [email protected].
i would usually look at the finance sector within the area because I think it is an indicator whether the area is strong economically. My first intention was to find out this information with England. My interest was in Leeds as I have read from Wikipedia that Leeds is the second financial Center after London. However, I couldn't find such support here, only Birmingham, Cambridge and Belfast were mentioned.
According to government website, the biggest percentage of finance economy in an area is Scotland. It has accounted for over 13% to which I have overlooked.
I have found that Scotland is an interesting economy because
1. They are the second biggest economy in U.K. after London
2. They have also got a big finance economy which I believe is important because we can see that the world is heavily relying on finance and monetary policy. Finance generate higher income and can help spur the economy.
I would therefore more drawn to study more about Scotland and Gasglow in my further research.
If you have have any comments please leave it in our blog or send me a mail [email protected].
5 town to study - some explanations
Basically there is no right or wrong how you get started, whether you start with 1 town or 3 towns or 5 towns. The key is to decide , if you decide 3 towns then pick 3 towns and get into it. There are several ways of how you can get started
- look at the average budget of the house you could afford and get started
- ask your friends, speak to some investors and ask them where they start and get to know more about their property investment
- pick somewhere you have friends, have a visit and start from there.
It is inevitable that the beginning seems clueless, but just keep going, you will find out a lot more once you go there once and speak to the property agent there. You have a look at the surrounding and you will get a much better feel about your investment. You will get your instinct!
Basically there is no right or wrong how you get started, whether you start with 1 town or 3 towns or 5 towns. The key is to decide , if you decide 3 towns then pick 3 towns and get into it. There are several ways of how you can get started
- look at the average budget of the house you could afford and get started
- ask your friends, speak to some investors and ask them where they start and get to know more about their property investment
- pick somewhere you have friends, have a visit and start from there.
It is inevitable that the beginning seems clueless, but just keep going, you will find out a lot more once you go there once and speak to the property agent there. You have a look at the surrounding and you will get a much better feel about your investment. You will get your instinct!
Key focus - some explanations:
As there is a net decrease of population in London. The population is moving outward. And where do they move to? I don't know. However, we understand that people are moving up north, probably with an employment opportunity. We also understand that HS1 and HS2 are set to be built. We can assume that development will grow near major train stations, so we should pay attention to those area. HS1 would be Birmingham and HS2 will connect Birmingham to places like Sheffield, Leeds and Edinburgh. We can see that many jobs would move from London to elsewhere with the increase accessibility and lower property price. This usually happen everywhere around the world.
As there is a net decrease of population in London. The population is moving outward. And where do they move to? I don't know. However, we understand that people are moving up north, probably with an employment opportunity. We also understand that HS1 and HS2 are set to be built. We can assume that development will grow near major train stations, so we should pay attention to those area. HS1 would be Birmingham and HS2 will connect Birmingham to places like Sheffield, Leeds and Edinburgh. We can see that many jobs would move from London to elsewhere with the increase accessibility and lower property price. This usually happen everywhere around the world.
key focus 2 - some explanations:
Glasgow:
this is another area I have initiated study and built my network. I found this is an easy area to start because of the relatively smaller budget. It is also fortunate that I have been able to meet someone helpful and there is an opportunity for us to work together.
My proposal was like this: I currently do not have the level of deposit that enables me to start. However, I don't have any mortgage on me and with my current income level. I think I m more than legible to apply a mortgage successfully. If my working partner could gather the payment then I will be the bearer of the mortgage. We would agree that we will not be selling the property within a period of 5 years. To do that, it would be a win-win situation. My partner won't be able to make a mortgage but he has the fund. We both complement one another.
I would be able to show my first portfolio to my potential partners, the expenses, the return, the work, the management fee....everything. I would be convincing enough to attract more funds and get the business started.
So this first project is so important to me.
If you have any comments regarding my thoughts. Please comment on our blog post. I will be waiting for your comments!
Glasgow:
this is another area I have initiated study and built my network. I found this is an easy area to start because of the relatively smaller budget. It is also fortunate that I have been able to meet someone helpful and there is an opportunity for us to work together.
My proposal was like this: I currently do not have the level of deposit that enables me to start. However, I don't have any mortgage on me and with my current income level. I think I m more than legible to apply a mortgage successfully. If my working partner could gather the payment then I will be the bearer of the mortgage. We would agree that we will not be selling the property within a period of 5 years. To do that, it would be a win-win situation. My partner won't be able to make a mortgage but he has the fund. We both complement one another.
I would be able to show my first portfolio to my potential partners, the expenses, the return, the work, the management fee....everything. I would be convincing enough to attract more funds and get the business started.
So this first project is so important to me.
If you have any comments regarding my thoughts. Please comment on our blog post. I will be waiting for your comments!
Some key points:
There are several steps that we could take.
1. Rightmove to study sale price and rent
We would compare the selling price and the rent to know how much yield we would expect. For example: the property is worth £50,000 and the yearly rent is £5,000. You get a yield that is 10%. It is considered quite high at 10%. It is important to check you area, compare the rent in the same area with the same setting (e.g. 1 room selling price vs 1 room rent) to get you yield. I would recommend you to use rightmove.co.uk. Get familiar with it and it gives you a lot of information you need.
2. Study hospital, university, transportation, train station
When the property is close to the hospital, you will get a good yield because doctors and nurse might live close to their workplace. I remember a time when my aunt gets really sick. My uncle rented an apartment near the hospital for a very long period of time and I think this gives a good indication for buying near the hospital
University, not only you get students, you also get professors, research students, overseas student, who are ready to pay rent for a long stretch of time. It is worth spending the time, to check out the universities in your area to get a better understanding.
Transportation can definitely changes the demand of an area. Be sure to check out HS1 and HS2 developments. It might sound a lot but U.K. is already a small country to study and understand!
3. Study Council website
You will know a lot more about the future development through reading the council website. Normally, if you read more about the area, it will give you a better idea of what are the major developments in the area. I suggest you to search using different keywords like Bradford development news, or call up an agent and ask them about it. I'm sure you be able to find out a lot about it.
There are several steps that we could take.
1. Rightmove to study sale price and rent
We would compare the selling price and the rent to know how much yield we would expect. For example: the property is worth £50,000 and the yearly rent is £5,000. You get a yield that is 10%. It is considered quite high at 10%. It is important to check you area, compare the rent in the same area with the same setting (e.g. 1 room selling price vs 1 room rent) to get you yield. I would recommend you to use rightmove.co.uk. Get familiar with it and it gives you a lot of information you need.
2. Study hospital, university, transportation, train station
When the property is close to the hospital, you will get a good yield because doctors and nurse might live close to their workplace. I remember a time when my aunt gets really sick. My uncle rented an apartment near the hospital for a very long period of time and I think this gives a good indication for buying near the hospital
University, not only you get students, you also get professors, research students, overseas student, who are ready to pay rent for a long stretch of time. It is worth spending the time, to check out the universities in your area to get a better understanding.
Transportation can definitely changes the demand of an area. Be sure to check out HS1 and HS2 developments. It might sound a lot but U.K. is already a small country to study and understand!
3. Study Council website
You will know a lot more about the future development through reading the council website. Normally, if you read more about the area, it will give you a better idea of what are the major developments in the area. I suggest you to search using different keywords like Bradford development news, or call up an agent and ask them about it. I'm sure you be able to find out a lot about it.
Leeds & Bradford - How to determine how big of an area you shall study?
This covers the area between Leeds and Bradford. As you can see Bradford airport is above and between the two city centres. I was trying to look for properties between £50,000 to £80,000, when I only include Leeds. There is only 60 properties, according to professional advice, 60 is not enough for you to make a good negotiations and with this we need to expand our search area so the available properties will be above 100.
This covers the area between Leeds and Bradford. As you can see Bradford airport is above and between the two city centres. I was trying to look for properties between £50,000 to £80,000, when I only include Leeds. There is only 60 properties, according to professional advice, 60 is not enough for you to make a good negotiations and with this we need to expand our search area so the available properties will be above 100.
60 properties is not enough.... - some explanations
When your area of interest has only 60 properties (like what I did when I searched Leeds). You would need to increase your price range and/or enlarge your search area so that you would have a choice of above 100 properties. For me, I went on & include my search in Bradford to have enough properties.
Later on, I even focus myself on Bradford area as I think it is a good area to find a good buy to let properties. I saw a lot of newborn babies and nuclear family in the area along Tong Street, Shipley is also a lively area. If you have any comments on Leeds and Bradford, please leave us a comment on our blog discussion.
When your area of interest has only 60 properties (like what I did when I searched Leeds). You would need to increase your price range and/or enlarge your search area so that you would have a choice of above 100 properties. For me, I went on & include my search in Bradford to have enough properties.
Later on, I even focus myself on Bradford area as I think it is a good area to find a good buy to let properties. I saw a lot of newborn babies and nuclear family in the area along Tong Street, Shipley is also a lively area. If you have any comments on Leeds and Bradford, please leave us a comment on our blog discussion.
At least 100 properties to be feasible - some explanations:
Once I have included Bradford the number of choices increased dramatically. As you can see in the picture above a lot of the properties is concentrated on the left that is Bradford. Bradford is 3 train stations away from Leeds, traveling is about 30mins from Leeds City Center, currently I saw quite some vacant shops units near the train stations, however, when you leave the town center, situations started to change with newly developed areas seems more organized and lively, e.g. Shipley and some parts of the area in BD3. I also notice that apartment in BD1 as also great demand, so is Little Germany.
I would have to spend more efforts in spending a second trip to Leeds and Bradford to have a better picture. If you have any information about Leeds and Bradford that you like to share with us. Please make a comment on our blog post (At least 100 properties to be feasible...)
Once I have included Bradford the number of choices increased dramatically. As you can see in the picture above a lot of the properties is concentrated on the left that is Bradford. Bradford is 3 train stations away from Leeds, traveling is about 30mins from Leeds City Center, currently I saw quite some vacant shops units near the train stations, however, when you leave the town center, situations started to change with newly developed areas seems more organized and lively, e.g. Shipley and some parts of the area in BD3. I also notice that apartment in BD1 as also great demand, so is Little Germany.
I would have to spend more efforts in spending a second trip to Leeds and Bradford to have a better picture. If you have any information about Leeds and Bradford that you like to share with us. Please make a comment on our blog post (At least 100 properties to be feasible...)
Need to include Bradford - some explanations:
As you can see after including Bradford, the number of property has dramatically increased from 60 to over 200. It means that we can base on our budget to study those properties and start identifying and narrowing down to a more specific area, street or neighborhood we like to invest. This could help the investment process as we know very clearly what do we want.
Another way to source a potential property is working the number of backwards. Based on the return you want (say 10%), then you will know the market rent of that area, by working backwards with your number, you will know what price you are willing to pay to achieve the return you want.
As you can see after including Bradford, the number of property has dramatically increased from 60 to over 200. It means that we can base on our budget to study those properties and start identifying and narrowing down to a more specific area, street or neighborhood we like to invest. This could help the investment process as we know very clearly what do we want.
Another way to source a potential property is working the number of backwards. Based on the return you want (say 10%), then you will know the market rent of that area, by working backwards with your number, you will know what price you are willing to pay to achieve the return you want.
Buy to Let Yield Map: Winning postcode in Northern U.K.
I was initially interested in Leeds City Center and haven't thought much about Bradford. After receiving information that Bradford provides high return and I started to study Bradford deeper. When I compare the house price and rent of the area, it is relatively easier to find yield that produces higher return.
Let me know if you have investment in other areas that corresponds to the chart in the slides. If you have any more comments about buy-to-let yields in U.K.
Do make a comment on our blog post - Buy to let Yield Map: Winning postcode in Northern U.K.
I was initially interested in Leeds City Center and haven't thought much about Bradford. After receiving information that Bradford provides high return and I started to study Bradford deeper. When I compare the house price and rent of the area, it is relatively easier to find yield that produces higher return.
Let me know if you have investment in other areas that corresponds to the chart in the slides. If you have any more comments about buy-to-let yields in U.K.
Do make a comment on our blog post - Buy to let Yield Map: Winning postcode in Northern U.K.
Bradford 150 VS Leeds 638 - some explanations
to understand whether there is a demand for HMO, we can use www.spareroom.co.uk// to search the area, check the rent and calculate whether your purchase can make the yield you expect.
You can do this simple calculation
no. of rooms x monthly rent x 12 months / purchase price = Return on Investment
To reduce the risk of your investment, you could:
1. Reduce your expect rent of 10%
2. Increase your expected expense by 10%
3. Include 1 month of vacant period in your rental
If the number still works then you are on the safe side.
From this search (the picture above - Bradford 150 VS Leeds 638) , it is easy to understand that room-sharing usually works in area where property value is higher (Leeds), people couldn't afford to rent the whole house and would therefore rent a room instead. From this line of reasoning, lower budget area (Bradford) would have less demand for room-sharing.
When you look at room-share in Bradford, it is concentrated in the City Center or the University Area, there is still demand but it is more limited to flats or student accommodations. From the property training, we would need to find areas that already have a sufficient no. of room-shares as a key indicator if HMO will work out which I will also agree.
Please comment on our blog post - "finding an area for HMO"
to understand whether there is a demand for HMO, we can use www.spareroom.co.uk// to search the area, check the rent and calculate whether your purchase can make the yield you expect.
You can do this simple calculation
no. of rooms x monthly rent x 12 months / purchase price = Return on Investment
To reduce the risk of your investment, you could:
1. Reduce your expect rent of 10%
2. Increase your expected expense by 10%
3. Include 1 month of vacant period in your rental
If the number still works then you are on the safe side.
From this search (the picture above - Bradford 150 VS Leeds 638) , it is easy to understand that room-sharing usually works in area where property value is higher (Leeds), people couldn't afford to rent the whole house and would therefore rent a room instead. From this line of reasoning, lower budget area (Bradford) would have less demand for room-sharing.
When you look at room-share in Bradford, it is concentrated in the City Center or the University Area, there is still demand but it is more limited to flats or student accommodations. From the property training, we would need to find areas that already have a sufficient no. of room-shares as a key indicator if HMO will work out which I will also agree.
Please comment on our blog post - "finding an area for HMO"
Leeds - Property Price drop by roughly 25%
Landregistry.data.gov.uk is government website where you could find government statistics about what's happening in the property market by area & by year.
House Price Indices - the change of price over the past years starting 1995, so you can notice the change of house prices over the years.
Sales volume - I think this indicates a lot about development and economic activities of the area
Average prices - you will understand the trends over the years and what happened during major economic crisis
From these major indices, it will present you a big picture and you will be able to compare with different locations more easily
For Leeds
You can see that the price peaked at 2008 and it didn't suffer a major price drop during the financial crisis 2008. The housing prices has been pretty stable. You can foresee that you might not be looking for a lot of appreciation but you will get a decent return in Leeds.
If you have any comments, please visit the blog post - Leeds - Property Price drop by roughly 25%
Landregistry.data.gov.uk is government website where you could find government statistics about what's happening in the property market by area & by year.
House Price Indices - the change of price over the past years starting 1995, so you can notice the change of house prices over the years.
Sales volume - I think this indicates a lot about development and economic activities of the area
Average prices - you will understand the trends over the years and what happened during major economic crisis
From these major indices, it will present you a big picture and you will be able to compare with different locations more easily
For Leeds
You can see that the price peaked at 2008 and it didn't suffer a major price drop during the financial crisis 2008. The housing prices has been pretty stable. You can foresee that you might not be looking for a lot of appreciation but you will get a decent return in Leeds.
If you have any comments, please visit the blog post - Leeds - Property Price drop by roughly 25%
Leeds - Huge decrease in sales volume from 2008 - some explanations:
You will notice that there is a huge decrease in sales volume during 2008 but if you remember from previous slide, the price drop is only 25%. The price remain pretty stable starting from 2004. If I draw a line across and make an average. It looks like before 2008 the average is about 1300 and after 2008, the average is about 800 - 1000. I think it is also worthwhile to compare the changes in other region. If you have comments on this post or if you notice any difference in other difference, please let us know in our blog post.
I personally like to ask readers 1 question: Why there is a huge difference before & after 2008? Why didn't sales grow back to its original level even after a long period of time?
You will notice that there is a huge decrease in sales volume during 2008 but if you remember from previous slide, the price drop is only 25%. The price remain pretty stable starting from 2004. If I draw a line across and make an average. It looks like before 2008 the average is about 1300 and after 2008, the average is about 800 - 1000. I think it is also worthwhile to compare the changes in other region. If you have comments on this post or if you notice any difference in other difference, please let us know in our blog post.
I personally like to ask readers 1 question: Why there is a huge difference before & after 2008? Why didn't sales grow back to its original level even after a long period of time?
Leeds I m looking at 50,000 - 80,000 property. This is off budget - some explanations
As you can see the sales volume in Jun 2015 was 980 and the average price was 130,556. I quickly jumped to my conclusion that the market is off my budget, which I later found it wasn't right. You are still able to find properties within your budget, just it might take a little more time in finding it.
The figures on the government website help you study the trends of the market over time and give you an idea of what's is happening at a particular moment in time. For example, you will notice a drop in price and sales volume of 2008 and you will also notice a steady property price over a long period of time in Leeds or in general, the Northern U.K., whereas London prices dropped and bounced back in a more volatile manner.
You are also able to notice if any difference in prices and sales volume.
If you have any comment regarding the use of the government website and any noticeable trends we can make use of. Please let us know in our blog post "Leeds property prices, what is the trend ?"
As you can see the sales volume in Jun 2015 was 980 and the average price was 130,556. I quickly jumped to my conclusion that the market is off my budget, which I later found it wasn't right. You are still able to find properties within your budget, just it might take a little more time in finding it.
The figures on the government website help you study the trends of the market over time and give you an idea of what's is happening at a particular moment in time. For example, you will notice a drop in price and sales volume of 2008 and you will also notice a steady property price over a long period of time in Leeds or in general, the Northern U.K., whereas London prices dropped and bounced back in a more volatile manner.
You are also able to notice if any difference in prices and sales volume.
If you have any comment regarding the use of the government website and any noticeable trends we can make use of. Please let us know in our blog post "Leeds property prices, what is the trend ?"
Leeds - some explanations:
This is to show you the other statistics you can get from the Land Registry website, you can notice the monthly & yearly change in terms of property prices. I think what you can see if you dig deeper among regions, you may find what areas experience a bigger change (upward trend) in terms of prices.
In general, I don't think there is huge significance to those figures here.
This is to show you the other statistics you can get from the Land Registry website, you can notice the monthly & yearly change in terms of property prices. I think what you can see if you dig deeper among regions, you may find what areas experience a bigger change (upward trend) in terms of prices.
In general, I don't think there is huge significance to those figures here.
Rental Index - We need to compare the trend price VS rent
Chart (left)
What we need to know if what would happen when property prices are volatile. We can notice that on the right side of the chart. What happens to rent over 5 years from Jan 2007 - Nov 2012. We can notice that during economic turmoil from 2008 to 2010. Rent only reduced at less than 1% at the lowest point. The volatility outside of London is even less severe. I think the reason being, rents are often set for 1 year and therefore, rents volatility does not reflect as quickly as property prices.
As a investor, that is good news because this shows no matter when you have decided to go into the market, it is unlikely to make a loss because even a 20% price drop, you will experience a 1% drop in rental income. It is highly possible your rent could take this hit ( we will you an example calculation on the next slide)
Chart (right)
This graph tells much story that the one on the left.
1. the first thing that I notice is the sharp dive on house prices during 2008 to 2010.
2. you can see that the rent only started to decrease 2010, rent is reacting to market volatility slower than property price
3. From 2006 - 2008, property price increased about 20% in London, Rent only increased to just less than 5% at its highest. This means that rental return is diminishing.
4. In 2014, London house price is breaking records, an increase of over 20%. However, you can notice that never increases over 5% and it was even going down from 2013 - 2014
As a conclusion, the housing market looks pretty stable to me as an investor.
Let us know in our blog post august-23rd-2017.html"Is UK Property Market good for investment?" if you have any comments! I will be waiting for you
Chart (left)
What we need to know if what would happen when property prices are volatile. We can notice that on the right side of the chart. What happens to rent over 5 years from Jan 2007 - Nov 2012. We can notice that during economic turmoil from 2008 to 2010. Rent only reduced at less than 1% at the lowest point. The volatility outside of London is even less severe. I think the reason being, rents are often set for 1 year and therefore, rents volatility does not reflect as quickly as property prices.
As a investor, that is good news because this shows no matter when you have decided to go into the market, it is unlikely to make a loss because even a 20% price drop, you will experience a 1% drop in rental income. It is highly possible your rent could take this hit ( we will you an example calculation on the next slide)
Chart (right)
This graph tells much story that the one on the left.
1. the first thing that I notice is the sharp dive on house prices during 2008 to 2010.
2. you can see that the rent only started to decrease 2010, rent is reacting to market volatility slower than property price
3. From 2006 - 2008, property price increased about 20% in London, Rent only increased to just less than 5% at its highest. This means that rental return is diminishing.
4. In 2014, London house price is breaking records, an increase of over 20%. However, you can notice that never increases over 5% and it was even going down from 2013 - 2014
As a conclusion, the housing market looks pretty stable to me as an investor.
Let us know in our blog post august-23rd-2017.html"Is UK Property Market good for investment?" if you have any comments! I will be waiting for you
What does it mean? - some explanations
From the previous slide, we can see the trend in property price VS rent. Even a 20% drop in property price, the decrease in rent is less than 1%.
Let's exaggerate the decrease in rent by 10 times, 10%. What would have been the impact on our Cashflow?
Market Rent £425
reduce by 10%, you will get
Reduced Rent £382.5
Mortgage Payment £127
Management Fee £45
Monthly Outgoing Expense (MOE) £45
Cashflow £165.5
What does it mean?
It means that even rent reduces by 10%, you still get positive cashflow. That would have given you a good assurance as a form of investment in U.K. Property.
If anyone has any comments or questions, please go to our blog posts "When property prices drop 20% in U.K? What happen to Rent?" and make a comment!
From the previous slide, we can see the trend in property price VS rent. Even a 20% drop in property price, the decrease in rent is less than 1%.
Let's exaggerate the decrease in rent by 10 times, 10%. What would have been the impact on our Cashflow?
Market Rent £425
reduce by 10%, you will get
Reduced Rent £382.5
Mortgage Payment £127
Management Fee £45
Monthly Outgoing Expense (MOE) £45
Cashflow £165.5
What does it mean?
It means that even rent reduces by 10%, you still get positive cashflow. That would have given you a good assurance as a form of investment in U.K. Property.
If anyone has any comments or questions, please go to our blog posts "When property prices drop 20% in U.K? What happen to Rent?" and make a comment!
What does it mean - some explanations:
There are 3 conclusions I like to make here
We will never make negative cashflow
This was illustrated in the previous slide. I have made a blog post "When property prices drop 20% in U.K? What happen to Rent?". It demonstrates that if you find a property with decent return, even under market upset on property prices, the rent only goes down with less than 5%. So it will safeguard your investment from negative cashflow, go and have a look at my blog post when-property-prices-drop-20-in-uk-what-happen-to-rent.html
HMO will win for sure
My last calculation is based on a buy-to-let return, if we work on HMO, the return will be higher and the chance of making a loss will be greatly reduced.
After refurb, we can remortgage
It might be more difficult for overseas investor to get remortgage. I started to get news by fellow investor and getting remortgage. The rate is the beginning might not be as good but overtime, when you have more trust from the bank you will get a better rate.
Second point, if you buying property that you can add value, it is also highly probable that you can get all you cash out with infinite return. I m going to develop a case and show you how!
There are 3 conclusions I like to make here
We will never make negative cashflow
This was illustrated in the previous slide. I have made a blog post "When property prices drop 20% in U.K? What happen to Rent?". It demonstrates that if you find a property with decent return, even under market upset on property prices, the rent only goes down with less than 5%. So it will safeguard your investment from negative cashflow, go and have a look at my blog post when-property-prices-drop-20-in-uk-what-happen-to-rent.html
HMO will win for sure
My last calculation is based on a buy-to-let return, if we work on HMO, the return will be higher and the chance of making a loss will be greatly reduced.
After refurb, we can remortgage
It might be more difficult for overseas investor to get remortgage. I started to get news by fellow investor and getting remortgage. The rate is the beginning might not be as good but overtime, when you have more trust from the bank you will get a better rate.
Second point, if you buying property that you can add value, it is also highly probable that you can get all you cash out with infinite return. I m going to develop a case and show you how!
Sale Price - some explanations
First Step
We gonna have to check on rightmove the price level of the area so we have a rough idea what kind of budget we are looking to inves
As you can see a 3 bedroom terraced house costs £65,000 ( I m looking at a budget of £50,000 to £80,000), so the budget seems achievable so I would at more of the properties.
Second step
I am going to check at spareroom what prices I get when I rent out the room.
By multiplying the number of rooms I can create in that house, I would know the total rent and work backwards for the property price I can pay.
First Step
We gonna have to check on rightmove the price level of the area so we have a rough idea what kind of budget we are looking to inves
As you can see a 3 bedroom terraced house costs £65,000 ( I m looking at a budget of £50,000 to £80,000), so the budget seems achievable so I would at more of the properties.
Second step
I am going to check at spareroom what prices I get when I rent out the room.
By multiplying the number of rooms I can create in that house, I would know the total rent and work backwards for the property price I can pay.
Sale Price - some explanations
This is another example of what is available in Leeds and the price range between £50,000 - £80,000 is highly possible.
However, make sure to use google map to look around the neighborhood, watch out for things like what type of cars are parked in the area, it gives you a sense of the income level within the area.
You should also watch out for garbage along the street. Usually, in low income level area, you will see garbage flying around. Sofa being dumped on the street and no one takes care, these are signs of low-income area that we should avoid.
I think it is always good to drive around the area before you put money down because if you view this as a long term investments, it is worth to spend the time and money to get a good understanding of your investment.
Please feel free to make comments on our blog!
This is another example of what is available in Leeds and the price range between £50,000 - £80,000 is highly possible.
However, make sure to use google map to look around the neighborhood, watch out for things like what type of cars are parked in the area, it gives you a sense of the income level within the area.
You should also watch out for garbage along the street. Usually, in low income level area, you will see garbage flying around. Sofa being dumped on the street and no one takes care, these are signs of low-income area that we should avoid.
I think it is always good to drive around the area before you put money down because if you view this as a long term investments, it is worth to spend the time and money to get a good understanding of your investment.
Please feel free to make comments on our blog!
Rent - 3 bedroom rent about £500 -600 per calendar month
After searching for the target property price in the market, we should look at the market rent and understand the return. If you search in Bradford area there is 140 properties within £500 - 600, we would know that the rent is a market rate. To give you a rough idea the return you are looking at
500 x 12 months / £50,000 = 12%
500 x 12 months / £60,000 = 10%
500 x 12 months / £70,000 = 8.5%
500 x 12 months / £80,000 = 7.5%
For a return that is acceptable, normally we would look for 10%. So you would know that when you search for a property. The highest price you can afford to pay is £60,000 for a rent of £500 per month Or alternatively, you would need to figure out how to increase your rental yield. For example, you would rent it out as 2 flats or HMO, so you can receive a higher rent.
All in all, after looking at property prices and yield, you should a good idea that the return is not bad in Bradford. The next step is to go around the neighborhood and search for your property.
If you have gone through all the above information and gone up to here. I believe you are a committed investor. Don't forget to go to our blogs for more discussion and comments
After searching for the target property price in the market, we should look at the market rent and understand the return. If you search in Bradford area there is 140 properties within £500 - 600, we would know that the rent is a market rate. To give you a rough idea the return you are looking at
500 x 12 months / £50,000 = 12%
500 x 12 months / £60,000 = 10%
500 x 12 months / £70,000 = 8.5%
500 x 12 months / £80,000 = 7.5%
For a return that is acceptable, normally we would look for 10%. So you would know that when you search for a property. The highest price you can afford to pay is £60,000 for a rent of £500 per month Or alternatively, you would need to figure out how to increase your rental yield. For example, you would rent it out as 2 flats or HMO, so you can receive a higher rent.
All in all, after looking at property prices and yield, you should a good idea that the return is not bad in Bradford. The next step is to go around the neighborhood and search for your property.
If you have gone through all the above information and gone up to here. I believe you are a committed investor. Don't forget to go to our blogs for more discussion and comments
Price from 301 to 400 - some explanations
If you search through spareroom, you will see that in Bradford area, the room is about 60 - 80 per calendar month.
A room is about 240 to 320 per month
A 1 bedroom flat is about 300 - 400 per month
A 2 bed apartment or 2 bedroom terraced house 400 - 500 per month
I would think as the rent is so low, HMO will be very competitive. If we can buy a bigger block and convert into flats. It might be more feasible than competing with low rents like an HMO. I m going to visit Leeds again and keep studying! I would go to Blackpool, too. I will tell you more later.
If you search through spareroom, you will see that in Bradford area, the room is about 60 - 80 per calendar month.
A room is about 240 to 320 per month
A 1 bedroom flat is about 300 - 400 per month
A 2 bed apartment or 2 bedroom terraced house 400 - 500 per month
I would think as the rent is so low, HMO will be very competitive. If we can buy a bigger block and convert into flats. It might be more feasible than competing with low rents like an HMO. I m going to visit Leeds again and keep studying! I would go to Blackpool, too. I will tell you more later.
Bradford - some explanations
I first started to look at Leeds then I went on to study Bradford, as the area is a bit smaller and might be easier to understand. I went through the Land Registry statistics and found that the turnover has dropped dramatically since 2008. I can't explain what has happened. Did population moved out after the financial crisis?
The sales volume remains at about 500 up and down per month which I think it is pretty low for a city. If anyone can give a background about Bradford....Please comment on the blog post!
I first started to look at Leeds then I went on to study Bradford, as the area is a bit smaller and might be easier to understand. I went through the Land Registry statistics and found that the turnover has dropped dramatically since 2008. I can't explain what has happened. Did population moved out after the financial crisis?
The sales volume remains at about 500 up and down per month which I think it is pretty low for a city. If anyone can give a background about Bradford....Please comment on the blog post!
Bradford - some explanations:
Here on the land registry website, you can see that the sales volume reduced by half right after 2008. And you can also see that the monthly sales volume is roughly about 500 - 600 units per month
Here on the land registry website, you can see that the sales volume reduced by half right after 2008. And you can also see that the monthly sales volume is roughly about 500 - 600 units per month
Travel from Bradford to Leeds in 30 mins - some explanations:
I m making assumptions that people would like to travel to City Center and map out the Area for my research. Bradford Foster Square and Bradford Interchange would be a good spot, another study shall carry out to confirm if people work in the same area or working in the city center.
Of course the closer to City Center, the higher the price, I think it makes sense that people shall travel for work.
Frizinghall and Shipley is also under my considerations. The property price of Frizinghall is slightly lower due to the fact that there is quite a lot of immigrants from Asia moving in there. Locals are moving out of the are.
Shipley property price is higher and most of the locals are moving into that area. It is an up and coming area according to the Property Agents.
I m making assumptions that people would like to travel to City Center and map out the Area for my research. Bradford Foster Square and Bradford Interchange would be a good spot, another study shall carry out to confirm if people work in the same area or working in the city center.
Of course the closer to City Center, the higher the price, I think it makes sense that people shall travel for work.
Frizinghall and Shipley is also under my considerations. The property price of Frizinghall is slightly lower due to the fact that there is quite a lot of immigrants from Asia moving in there. Locals are moving out of the are.
Shipley property price is higher and most of the locals are moving into that area. It is an up and coming area according to the Property Agents.
Focused Area - some explanations:
The area within these 2 stations: Bradford exchange and Foster Square
I first chose to study the area between the 2 stations because I like to look at properties within walking distance of train stations. There is definitely an opportunity. However, most of them are flats and I like to take over houses. The reason being I don't want to be tied up by ground rent and once the leasehold agreement is below 85 years, I might face the chance of increased ground rent. For this reason, I started to look further away from the train stations and I see some good locations in BD3 and in Shipley.
I was once tempted to buy a flat right next to the train station, the price is good. It was about £50,000 with a return of about 10%.
I would suggest that you should try to build a network or at least to find a reliable local to start the journey. I was able to find an experienced property home owner from the Airbnb. I would suggest that when you are there, stay at an Airbnb and most of the time, the owner is a property investor and they are able to tell you a lot of the local and show you some good deals.
If you need help or information. Please comment on the post and I will get back to you!
The area within these 2 stations: Bradford exchange and Foster Square
I first chose to study the area between the 2 stations because I like to look at properties within walking distance of train stations. There is definitely an opportunity. However, most of them are flats and I like to take over houses. The reason being I don't want to be tied up by ground rent and once the leasehold agreement is below 85 years, I might face the chance of increased ground rent. For this reason, I started to look further away from the train stations and I see some good locations in BD3 and in Shipley.
I was once tempted to buy a flat right next to the train station, the price is good. It was about £50,000 with a return of about 10%.
I would suggest that you should try to build a network or at least to find a reliable local to start the journey. I was able to find an experienced property home owner from the Airbnb. I would suggest that when you are there, stay at an Airbnb and most of the time, the owner is a property investor and they are able to tell you a lot of the local and show you some good deals.
If you need help or information. Please comment on the post and I will get back to you!
Sale price as low as £45,000 - some explanations:
This are some proof to show that it is possible to buy a house as low as £45,000 and it is very possible to get a rent of £450 per month to get a 10% as a room itself would cost £70-90 per week that work out to £280 - 360 per calendar month
This are some proof to show that it is possible to buy a house as low as £45,000 and it is very possible to get a rent of £450 per month to get a 10% as a room itself would cost £70-90 per week that work out to £280 - 360 per calendar month
Rental Price - buy to let £425pcm - some explanations;
This is an example of the rental price in Bradford, it is a proof that you can get £425 x 12= £5,100, therefore with a £45,000 property, you can achieve 11 % return.
This is an example of the rental price in Bradford, it is a proof that you can get £425 x 12= £5,100, therefore with a £45,000 property, you can achieve 11 % return.
Spareroom £300 per calendar month - some explanations:
We have also checked in Spareroom what type of rent can we get a single room. The rent is about £300 per month. It shows 2 sides of the story
1. If we compare a room vs a house rental the price of a room seems not very competitive
2. If we were to go for a house, the yield seems great but would it be difficult to sell it.
The solution to ensure buying a house and can later on resell it is called "buy-to-win" or "make money in the buy". It is ensuring that when you bought the property you are already at a profit and if you resell it because it is bought at a lower than market value.You will always make a profit.
For this reason, there is always opportunity in the market, it is how you make the right calculation and the right move.
We have also checked in Spareroom what type of rent can we get a single room. The rent is about £300 per month. It shows 2 sides of the story
1. If we compare a room vs a house rental the price of a room seems not very competitive
2. If we were to go for a house, the yield seems great but would it be difficult to sell it.
The solution to ensure buying a house and can later on resell it is called "buy-to-win" or "make money in the buy". It is ensuring that when you bought the property you are already at a profit and if you resell it because it is bought at a lower than market value.You will always make a profit.
For this reason, there is always opportunity in the market, it is how you make the right calculation and the right move.
For Bradford, 300pcm (PER ROOM) should be the maximum you allow in your calculation for rent. If you receive higher rent, you should regard that as extra!
Conclusion - some explanations:
High demand of HMO in Leeds, however, only 60 property is available
This does not mean that there is no opportunity for HMO in Leeds, it just means that the HMO in Leeds might not be within my budget. However, one should not just give up the area if they pick it in the first place. Keep looking, just by adding an alert from rightmove.co.uk could keep you looking at it once in a while and maybe opportunity does pop up. For my research, I still set up a daily alert so I look if there are any good deals. I am planning a second trip to visit there by Apr 2018. My first trip I went to Leeds, Bradford, Barnsley, Liverpool. In my second trip, I would revisit Bradford and Leeds again just to have a second look and a better understanding, I would also visit Glasgow as I have 2 sourcing agents I could meet there. What I need to do now is to save up a little more deposit and get ready for my first purchase. I am also looking forward to my second trip. If any of you have any good tips about Leeds and Glasglow or any suggestions about any relevant people to me, please leave me a comment on my blog post - conclusions, thanks!
High demand of HMO in Leeds, however, only 60 property is available
This does not mean that there is no opportunity for HMO in Leeds, it just means that the HMO in Leeds might not be within my budget. However, one should not just give up the area if they pick it in the first place. Keep looking, just by adding an alert from rightmove.co.uk could keep you looking at it once in a while and maybe opportunity does pop up. For my research, I still set up a daily alert so I look if there are any good deals. I am planning a second trip to visit there by Apr 2018. My first trip I went to Leeds, Bradford, Barnsley, Liverpool. In my second trip, I would revisit Bradford and Leeds again just to have a second look and a better understanding, I would also visit Glasgow as I have 2 sourcing agents I could meet there. What I need to do now is to save up a little more deposit and get ready for my first purchase. I am also looking forward to my second trip. If any of you have any good tips about Leeds and Glasglow or any suggestions about any relevant people to me, please leave me a comment on my blog post - conclusions, thanks!
The consideration for a renter would be:
1. The time to spend on traffic going to work and the environment & cost to live 30 minutes away. The cost to spend more on transportation would be GBP107 per month
1. The time to spend on traffic going to work and the environment & cost to live 30 minutes away. The cost to spend more on transportation would be GBP107 per month