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Are flats in Crewe a good buy to let investment?

By April 19, 2015 No Comments

Are flats in Crewe a good buy to let investment?

 

I have been asked many times by landlords whether flats in Crewe are a good investment as opposed to houses.  So I thought I would do some research to share with you.  For this article  I have concentrated on CW1.  There are over 750 flats in CW1.  This represents around 4% of the housing stock in Crewe, with the national average being nearer 17.3%.  The combined average price of one and two bedroom flats in CW1 is around £101,705 which is up by 5.4% in the last 12 months.

If you are looking for a good yielding property you can buy a one bedroom flat on West Street for around £50,000.  The property would achieve around £350 p.c.m. in rent,  thats a yield of 8.2%.  However you must remember that every landlord has different circumstances, tax liabilities, mortgage interest rates etc so it is essential you fully understand the figures before deciding to buy.  You need to think about the types of tenants you wish to attract. Will you consider tenants on benefits or are you looking for working people.  If you are considering letting to tenants on benefits please see my recent article for more information.  This will have an influence where you buy and may have an impact on the price you will achieve for your flat

Finally lets not forget the potential increase in capital value of the property.  Looking at a flat on Verdin Court,Crewe it sold in 2005 for £75,500 and has now been valued at £82,950 thats an increase of 9.8%.  This property will attract a monthly rent of around £500 per month.  So lets just consider this as an investment,  having a monthly yield of around 7.2% and teamed with a 9.8%  rise in capital value this property would have made the investor a good return.

On the flip side of things some of the new two bedroom flats have seen a massive drop in value over recent years.  I have used  Delamere Court as an example because I was there very recently.  A modern two bedroomed flat in Delamere Court in 2006 originally sold for £138,950 and has now come onto the market for £79,500.  The values of these flats have dropped quite significantly and should give landlords a better return than the original investors who bought them back  in 2006.  These properties currently let at £450 p.c.m. giving a yield of 6.7%.  Some property speculators may say there is room for the prices to increase again back to the 2006 figure.  I am not recommending everyone go out and buy one of these flats but it maybe something that fits in with your investment strategy.  I wonder if the landlords who bought one of these at the time did their homework,  working out the expected return?  I bet they were’t expecting the property to reduce in value by 42%!

If you are considering going into the buy to let market, make sure you have your eyes open  and understand your responsibilities as a landlord.  Remember investing in property is a risk and values can go up as well as down.  See the article I wrote recently.  If you are using a letting agent make sure you share your exit plan with them, so that they can then give you the very best advice based on your own personal circumstances.

When working out the figures for flats and apartments you must remember to include any leasehold charges and service charges.  Check the small print in the sale documents and fully understand your responsibilities and consider how easy it will be to re sell your investment when the time comes.

I myself am not a particular fan of flats as an investment, but saying that if you are looking for a high yielding investment flats might be just what you are looking for.  There is nothing wrong with flats they rent well and not everyone wants the hassle of a garden and some like the security a block of flats can bring. Finding the right block in the right area is important, make sure it fits in with your investment strategy and what you are trying to achieve.

If you would like to talk to me about what makes a good investment then please give me a call on 01270 661395 or drop me an email at enquiries@sarahfaulkner.co.uk.