One and Only Pro has produced research which pinpoints the optimum areas in England and Wales where an investor can purchase a buy to let (BTL) property for less than £65,000.
The investment property platform locates houses with the largest future gains and highest yields. It uses algorithms to compare, scan and rank properties most likely to increase in value according to current returns and predicted future gains. This method would enable a novice investor to achieve a reasonable return on BTL property whatever their budget.
The research findings showed that Darlington took pride of place with 22% of properties in the category having the highest ranking in a town where the average price of such property is £56,468. Burnley came second with 21% of houses in the same category but where the average property costs only £37,210.
Third and fourth places went to Bootle and Grimsby, towns where buyers can purchase properties with the highest investment potential for an average price of £53,278 and £56,188 respectively. Fifth place went to Bradford where the average property price is £64,681.
The rest of the table was taken by the North East with Sunderland, Middlesbrough, South Shields and Hartlepool achieving the next four rankings. Keighley took the last slot in the top ten with an average price of property in the highest category standing at £64,268.
Henri Sant-Cassia, CEO at One and Only Pro, advises would-be investors with a budget to be patient when looking for bargains. He suggests focusing on several areas of opportunity. For instance, there is the vendor who is looking for a quick sale and would be willing to negotiate and agree a lower price.
An empty property which isn’t providing an income and has become a burden for the owner can make a great BTL investment and result in a good deal for the buyer. Similarly, an empty property requiring refurbishment will need to be priced competitively by the vendor.
Refurbishment may be seen as an easy option but there can be drawbacks. Sant-Cassia urges caution with this type of investment which can be time-consuming and, therefore, increase the total cost. The additional spend to carry out the required work and the top price the property is likely to fetch should be worked out before purchase. A survey should also be undertaken to reveal any hidden problems and to factor in any additional costs.
One disadvantage concerning refurbishing a house is that many mortgage companies will not grant a mortgage on a property requiring a significant amount of work. Furthermore, properties without a kitchen or bathroom are often considered uninhabitable. In such cases, it could be worth looking for a specialist mortgage or bridging loan to fund the work.
If a buyers’ market were to develop, purchasers able to finance a deal quickly could be at an advantage and find a bargain at auction.
But whatever the deal, the current market should always be taken into consideration. External factors such as Brexit could enable the investor to find the ideal property at the optimum price. However, the purchaser should never feel under pressure to make a higher offer if they are not comfortable with the price. Instead, they should take a break and wait for another opportunity to present itself.
Sant-Cassia concludes with a reminder that, as the results of the study show, location is always the most important factor in choosing a property for investment purposes.