£50-£75k Property Investments in Salford or Sheffield – Good or Bad?

by Readers Question

9:36 AM, 8th May 2015
About 4 years ago

£50-£75k Property Investments in Salford or Sheffield – Good or Bad?

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£50-£75k Property Investments in Salford or Sheffield – Good or Bad?

I’m currently looking at making my first investment – I have saved up just over £15,000 and my plan at the moment is to invest in either Sheffield or somewhere in Greater Manchester like Salford. Property Investments in Salford or Sheffield - good or bad

Really I’m looking for advice on how suitable properties between £50-£75k in these areas are for buy to let?

How safe an investment are they – will they rent well? And is it a good strategy to work towards building a portfolio of 5-10 of these properties – Or would I be better of saving a bit longer for my first property and buying somewhere more expensive?

I know from the forum there are housing associations (such Salix Homes in Salford) are many of you involved in renting to these associations and how’s it gone for you?

Quite a lot of questions I know, but I don’t want to make a huge mistake by putting my hard saved deposit into a property that will be difficult to rent or hard to sell on in the future.

All advice will be very much appreciated.

Thanks

James



Comments

Mark Alexander

9:43 AM, 8th May 2015
About 4 years ago

Hi James

Perhaps the biggest weakness in your current plan is letting to a Housing Association, may I ask why you are considering this please? My guess is that you don't live locally and that you are looking for a relatively passive investment?

The problem with letting to Housing Association is that neither BTL mortgage lenders nor insurance companies like this very much. This will restrict your borrowing options and/or your costs.

Ideally what you should go for is something that will attract good quality tenants where this is a good quality property manager already in place. Possibly even something with a tenant in-situ whereby you can get immediate cashflow. If you do consider something like that please read this article >>> http://www.property118.com/questions-ask-buying-tenanted-property/73290/

There are quite a few properties that might well suit your budget and requirements as a newbie investor listed on our tenanted property portal, particularly in Liverpool - see >>> http://www.property118.com/
.

Robert Mellors

11:00 AM, 8th May 2015
About 4 years ago

Hi James

I let properties in Sheffield. I am not a letting agent, and I do not own any in Sheffield (though I do elsewhere). I run an independent housing association that leases properties from private landlords on a 5 year lease, and then I sublet those properties. This is all above board and agreed with the property owners in advance of taking on the lease. I currently have 13 such properties in Sheffield, plus others in other areas nearby.

There is a huge demand for properties in Sheffield, of all sizes, by people in receipt of Housing Benefit, but it is important to understand the types of properties and the areas of Sheffield that will most appeal to potential tenants, (and give most flexibility as to which tenant types you choose to let to). Letting to tenants in receipt of Housing Benefit brings with it a higher degree of risk than letting to professional tenants, but the size of your budget perhaps limits the type and location of property you could get, and may thus limit your choice of tenant. If letting to Housing Benefit tenants, then you really need to understand the Housing Benefit system and how to manage these types of tenancies.

If you lease to a housing association, this takes away many of those risks, you get a guaranteed income each month throughout the lease period, and the housing association should return the property to you at the end of the lease term with vacant possession and in a reasonable condition, i.e. tenant damage repaired.

If you let through a letting agent, regardless of how good they are, you only get the rent they receive (less their commission), so if tenant does not pay, then you get nothing. If tenant causes damage, then it is you that has to pay for the repairs. If property remains vacant, e.g. between lettings, you get no rent.

If you let direct to tenants you would get the highest return (highest rent), but you have the highest risks and most hassle.

If you let via a letting and managing agent, then you reduce the rental income (as they take a commission), but you also reduce the risk (a bit), and you potentially reduce the hassle a lot. However, you can pay extra for insurances that may reduce those risks considerably, (and may even pay you rent for a couple of months if the tenants do not pay).

If you lease to a housing association then you reduce the potential rental income per month (but get it each and every month for the full period of the lease, so overall it could even out or even be more than the other options), and you reduce the risks (as the housing association pays you even if their tenant does not pay them, and the housing association repairs any tenant damage), and it reduces the hassle (property management issues) a lot.

Mark Alexander

11:47 AM, 8th May 2015
About 4 years ago

Hi James

Have a look at this one >>> http://buytolet.property118.com/properties/view_details/104
.

Sam Addison

16:52 PM, 8th May 2015
About 4 years ago

I have a couple of properties in Leigh, lancs on the border between Salford and Wigan. They both cost just over 60K a few years ago. (2 bed terrace, 3 bed ex-council). I use a local letting agent who knows the area and the people. (locally born and bred!)
The tenants are not on benefits and are long stayers.
I believe in getting 2 cheap houses rather than 1 expensive one because the yield is higher and any voids are less disastrous.

Sandra Savage-Fisher

9:09 AM, 9th May 2015
About 4 years ago

I'm a landlord and letting agent in Manchester area. I live in Salford and would suggest you get to know your areas before buying.

There are some lucrative deals to be had but it depends on your long term strategy as to whether they will work for you.

Media City and the BBC/ITV relocation is bringing changes within Salford but slowly. There are still areas I'd be wary of purchasing in unless your market is housing benefit tenants.

James Hughesman

11:36 AM, 9th May 2015
About 4 years ago

Thanks for your replies everyone, some really useful advice that has given me lots to consider.

The recurring message (particularly from Sandra and Robert) seems to be, that I need to make sure I get to know the area I choose to invest in very well and ensure its attractive to the type of tenant I want.

Mark you're absolutely right - I live in the South and want to buy something further North due to my budget and therefore something fairly hassle free to manage, which is why I was looking at housing associations. I hadn't considered buying something with a tenant in-situ but this is definitely something I'm going to investigate further.

Having read your article, my concerns are that I would be taking on someone else's problem or that I'd pay a premium because there's a tenant in place. Other than that the property you suggested looks ideal and I think I'll get in touch with the seller and investigate further. That sort of deal almost seems too good to true though?

Sam - I like the sound of what you're doing and that type of scenario also sounds ideal. Can I ask how did you choose to invest in Leigh - are you local or was it a case of lots of research to find the right area/property? And did it take you long to get good long term tenants?

Mark Alexander

11:42 AM, 9th May 2015
About 4 years ago

Hi James

I know the developers agent very well, in fact I've known him for seven years and he and his family spent last weekend at my home with my family. His company have won 15 awards for sales and management over the last few years. His name is Robin, please tell me he owes me a beer if you get in touch 😉
.

Sam Addison

19:02 PM, 9th May 2015
About 4 years ago

Reply to the comment left by "James Hughesman" at "09/05/2015 - 11:36":

I am local to Leigh now (born in NE).
My first property I got through talking to letting agent with a selection of properties from local estate agents and discussing pros and cons. It was in a bad way so bought for 42K and spent 20k doing up - everything except structural. tenant found by letting agent - still there after 5 years.
Second property I sourced in notorious Hag Fold estate in Atherton - drove round estate and assessed it for myself. Reputation is way out of date - now populated largely by tradesmen. £ bed semi cost 62k 3 years ago - spent 11k doing up and had tenants pointed in my direction by people on the estate. Passed them by letting agent. Are still there and expect them to be there for life.
Of course it helps that I am a good landlord who deals with any problems urgently and in the 2nd house I discuss problems with tenant personally.


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