Are you wondering – like me – if the property investment ship has sailed? Perhaps you’re interested to find out the reality of getting into property right now? With the property market certainly sailing through choppier waters at the moment, I spoke to Richard Forman, Head of Sales and Marketing at Forty/8 – the developers behind Manchester’s latest luxury development The Hallmark – to find out everything a parent needs to know about property investment in the current climate in this parent’s guide to property investment:
Who are Forty/8 and why do you focus on acquiring developments in regional cities and towns rather than London?
Forty/8 are led by design and built with confidence; developing contemporary apartments for sale in popular UK city and town centre locations, Forty/8’s projects are designed to enhance modern lifestyles.
We concentrate on the regional towns and cities as the entry price is far cheaper than London and so purchasing costs such as stamp duty are much lower. Also, the lower entry level makes investing more affordable to a far wider group of purchasers. On top of this the capital growth and rental yields now exceed those of the capital.
Why should I invest in property outside London?
The London property market isn’t the sure bet it once was. Aside from commercial property, on the residential side, tenant demand for high quality city centre apartments in regional cities such as Liverpool, Manchester, Birmingham and Leicester far outstrip supply not to mention the capital growth potential! The government has invested approximately 16.5 billion in the Northern Powerhouse project and both Liverpool and Manchester are reaping the benefits. JLL anticipate growth in Manchester between 2017 and 2021 to be an impressive 28.2%.
For those thinking about getting into property investment, where should they be looking?
First do your research, find where tenants want to live and where the demand is high. In our experience there are far more people looking for luxury city centre apartments than in housing developments away from the city centre. You should be looking at areas with inward investment that should sustain tenant demand and provide good yields with a promise of excellent capital growth. Investing in these central locations will reduce the void period and therefore increase the yield.
And what sort of properties might be a worthwhile investment in the current climate?
There’s always demand for high quality city centre apartments, we’d suggest buyers look for new build properties as they don’t tend to have any ongoing maintenance issues that a second hand property is more likely to have, which may put prospective tenants off, again this will affect the potential returns.
Added extras such as attractive communal areas and concierge service gives added value to the tenants and higher rents are achievable, meaning the investor can get a higher yield.
What are your do’s and don’ts of property investment?
Don’t let emotions influence your purchasing decision – this is a numbers game. Do make sure the property you’re buying ticks the boxes of what tenants want, not what you as the investor might want in your own home. Do think about the three key influencers when it comes to property appeal:
What about financing – what funding options are available for empty-nesters, retirement planners, or beginner investors?
We would advise any investor to try and invest at least 25% of the purchase price and leverage the rest with a mortgage. The bigger the deposit the better the interest rate. By using a mortgage, and not all cash, your capital growth return grows. There are many mortgage companies offering buy-to-let mortgages. We always advise our investors to speak with an independent financial advisor prior to any purchase.
What about parents with older children…should they consider a student buy-to-let? Why?
Any parent is justified in being concerned about how their children can get on the property ladder, so if they’re able to help, the earlier the better as prices always increase in the long term.
However, something to consider is that investing in student-only blocks ties you to only renting to students and restricts your selling ability in the future, as it can only be sold to an investor. If you buy a new residential apartment, you can widen your target audience by renting to professionals as well as students. This also makes the resale process far simpler and increases capital growth potential as you have a larger market to sell to.
What makes Forty/8 developments an attractive proposition to investors?
It’s all about location. Our developments are all located where tenant demand is high and right in the heart of the action. They’re all close to excellent transport links and offer parking. Also a key factor is that we only request a 10% deposit on exchange, many off plan developers require deposits of up to 50% and they use the deposit to fund the construction. However if they were to go bust, the investor would potentially lose that money. The 10% deposit taken on our developments sits in a secure solicitors account until completion, and at the Hallmark, we are offering to pay 7% interest on those monies on completion
Our purchasers are usually split 50/50 between buy-to-let investors and those looking to live in the developments (owner occupiers). As a result, the blocks all have a real sense of home, which prospective tenants instantly pick up on. Our chic interior designed entrance lobbies and beautiful communal spaces set the tone of each development as soon as you walk through the door. Quality is something we are enthusiastic about and it shows in the final product.
Have you been thinking about getting into property investment? What do you think about the above insights and advice given in this parent’s guide to property investment? Do share in a comment below.
***For more information on The Hallmark, Manchester see the development’s website here, go on a virtual walk-through here or download an information pack here. There is also a Investor Weekend taking place on Friday 20th – Sunday 22nd October at The Park Inn, Cheetham Hill Road, 10am – 5pm – guests can arrange an appointment online or just turn up over the weekend, tour the development via VR headset and discuss all details with the sales team on site. Please register your interest/RSVP here.***
*This is a collaborative post
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