Thursday 2 April 2015

The Next Big Thing?

Many buy-to-let investors would consider a 5% return exceptionally good, so what would you say to a property offering over 6%?  Such properties are exceptionally hard to find, especially in zone 2, but if you venture a little further away from the train and tube stations you’ll find your options start to open up.

Take this 1 bedroom ex-local flat just off Tulse Hill.  

Bus links up to Brixton are excellent meaning that commuting into central London is still a perfectly viable option and you get a lot more for your money than you would in the more traditional locations.  Admittedly this property needs a visit from the builders, but once renovated would fetch around £1050pcm giving a return of 6.3% at the asking price of just £200,000.

It’s well documented that parts of Lambeth have seen substantial price growth over the past 5 years, and many investors are now looking for the next big thing.  With the majority of first time buyers priced out of more central locations, we’re starting to see residential areas over ½ a mile from the tube deliver a similar level of price growth.

A similar flat sold in 2007 for £156,000 which means an increase of 28% in the 8 years to 2015.  This is nothing to write home about, but the real growth is yet to come.  This flat could quite easily be worth £240,000 in a year’s time, and £280,000 the year after that.

20% a year capital growth here is a very real possibility, and while you wait for your investment to go up in value, the 6% rental yield will do a good job of paying your mortgage!

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