Investing in Rotherham buy-to-let property is different from investing in the stock market or depositing your hard-earned cash in a building society.
Investing in a building society is considered by many to be a safe option but the returns you can achieve are awfully low (the best 2-year bond rate from Nationwide is a whopping 0.75% a year!)
Another investment is the stock market, which can give good returns, but unless you are on the phone every day to your stockbroker, most people invest in stock market funds. As a result, the investment is quite hands off and one always has the feeling of not being in control.
However, with buy-to-let, things can be more hands on.
One of the things many landlords like is the tactile nature of property – the fact that you can touch the bricks and mortar.
It is this factor that attracts many of Rotherham’s landlords – they are making their own decisions rather than entrusting them to city whizz kids in Canary Wharf playing roulette with their savings.
I always say investing in property is a long-term game.
When you invest in the property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as ‘capital growth’. Capital growth, also known as capital appreciation, has been strong in recent times in Rotherham. The value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.
Rental income is what the tenant pays you – hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return.
So, over the last five years, an average Rotherham property has risen by £22,950 (equivalent to £12.58 a day), taking it to a current average value of £141,900.
Yields range from 5% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).
Flipping property – a different way to make money?
However, something I haven’t spoken of before is the more specialist area of flipping property to make money. (flipping – buying a property, carrying out some minor cosmetics and reselling it quickly).
I have seen several investors recently who have made decent returns from this strategy. For example …
- One Rotherham investor paid £155,000 for a 2 bed bungalow on Spinneyfield in June 2015. It appears some cosmetic work was done to the property and it was resold at the end of the year (December 2016) for £250,000 – that’s 61.29% return before costs (or compound annual return equivalent of 39.07% AER)
- Another Rotherham investor flipped a lovely 2 bed cottage on The Croft, Harley. They paid £170,000 in March 2015 and sold it again after doing some cosmetic works for £270,000 towards the end of last year (November 2016) – that’s 58.82% return before costs (or equivalent 33.07% AER)
This demonstrates how the Rotherham property market has not only provided very strong returns for the average investor over the last five years but how it has permitted a group of motivated buy-to-let Rotherham landlords and investors to become particularly wealthy.
As my article mentioned a few weeks ago, more and more Rotherham people may be giving up on owning their own home and are instead accepting long term renting. Buy-to-let lending continues to grow from strength to strength.
If you want to know what (and what would not) make a decent buy-to-let property in Rotherham, then please get in touch with me. I am happy to give advice. More in-depth insight and knowledge is of course available within this blog and on my Twitter and Facebook pages.
