Glasgow/Leeds/Manchester or save for a year to buy in London?

by Readers Question

20:20 PM, 16th March 2015
About 4 years ago

Glasgow/Leeds/Manchester or save for a year to buy in London?

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Glasgow/Leeds/Manchester or save for a year to buy in London?

I would like to invest some savings that I’ve got into a property through buy to let (min 25% LTV). Unfortunately my savings are not big enough to purchase even a small property in London for now. So I have a choice: Glasgow Leeds Manchester or save for a year to buy in London

– save for another year and hopefully get small property in London
– purchase a new build (off-plan) property in Glasgow/Leeds/Manchester

I’ve done some research and looks like yields in Glasgow/Manchester/Leeds are higher than I can get in London (approx 7-8% in those cities against 5% in London). But the problem is that property prices in those cities have mainly fallen in recent 5 years but in London they went in the opposite direction. So yield-wise those cities are more attractive but in long-term perspective London hypothetically wins (as you can make money on selling rather than on rent).

So, bottom line, I’m a bit lost and would kindly ask for local community advise on this.

Thank you

Vlad



Comments

Mark Epps

11:16 AM, 17th March 2015
About 4 years ago

Reply to the comment left by "rav singh" at "17/03/2015 - 10:11":

Why does everyone assume that you will get better capital growth in London? There's been a boom, yes, but this might just mean you've missed the boat. You can't buy in the expectation of general capital growth, only in the expectation of good rental yield.

Mark

Dan Sawyer Cherry Picked Properties

11:40 AM, 17th March 2015
About 4 years ago

Reply to the comment left by "Ian Ringrose" at "17/03/2015 - 11:08":

Hi Ian,

I agree that they shouldn't go at it alone as that could be costly.

However, I act for London investors that pay a sourcing fee for my expertise and local knowledge that allows them to invest further afield where potentially higher returns can be found. It also takes care of the project management side if there are works to be done which again if not local would be an issue.

Choose your property investment consultant very carefully as should you seek help this aspect will be one of the most important investment decisions you will make. Property investment is unregulated and so sadly there are dozens of companies that will sell anything to get a fee!

Dan Sawyer

Ian Ringrose

12:07 PM, 17th March 2015
About 4 years ago

"Choose your property investment consultant very carefully...." the problem is someone that does not understand the area you operate in, has no way to know if you are doing it well!

Valuation after the work have been done to a property can not really be trusted, unless there are a lot of home owners and an ACTIVE market with them buying in the area.

Claimed yields can not be trusted, as someone that does not know the area "road by road" can not predict the number of voids and beak-ins.

Dan Sawyer Cherry Picked Properties

13:39 PM, 17th March 2015
About 4 years ago

One can quite easily research and verify the figures that are claimed with all the online property tools that are out there but in addition to this..

-Call the local agents.
-Come and view the property in person
-Meet the company / consultant in person
-Get a building survey if not new build

I agree that valuations aren't worth the paper they're written on when used to promote a discount. Even when there are owner occupiers around I'm wary of them. Achieved sales on like for like properties is what to look for.

I hope that the 118 readers will adopt some common sense and not plunge in without verifying what they are being told or at least I'd like to think so given the amount of money they're potentially investing.

Guaranteed yields (often on student or international) are the ones to avoid as it firstly you can't offer guaranteed rents in this unregulated market and secondly if they're offering a guarantee you can bet that it's built into the inflated price.

Ian Ringrose

14:49 PM, 17th March 2015
About 4 years ago

"Achieved sales on like for like properties" are great, but in a lot of the areas with the best yields, there are very few "open market" sales of properties in a good condition.

And Dan that is why you can make so much money operating in those areas if you know them VERY well.

Dan Sawyer Cherry Picked Properties

15:44 PM, 17th March 2015
About 4 years ago

I think we buy different types of properties Ian.

To clarify, the properties I'm talking about are the 8% yields in good areas that have little or no void periods, experience high growth and that suit professional tenants. There are plenty of resale comparables for these.

If by "best yields" you mean circa 10% plus in less affluent areas then this is when i agree with you, do not buy far away from where you live as the management will be a nightmare! You'll receive little growth as these areas are still depressed with few job prospects so DSS and benefit tenants will be your market. Not a market I would target by proxy if at all if you're an armchair or first time investor.

Whilst I advocate buying for yield over capital growth, there is a sliding scale and somewhere in the middle will give you a well balanced portfolio and the best of both worlds.

Mark Alexander

15:46 PM, 17th March 2015
About 4 years ago

Reply to the comment left by "Dan Sawyer Cherry Picked Properties" at "17/03/2015 - 15:44":

Welcome to Property118 Dan, I am enjoying your posts.

I think you will like our latest project too >>> http://www.property118.com/buying-selling-tenanted-property/
.

Dan Sawyer Cherry Picked Properties

16:02 PM, 17th March 2015
About 4 years ago

Reply to the comment left by "Mark Alexander" at "17/03/2015 - 15:46":

Hi Mark,

Thank you.

Great idea and I'm sure i'll be able to use it. Will there be an option to buy or sell vacant properties as well?

Dan

Mark Alexander

16:08 PM, 17th March 2015
About 4 years ago

Reply to the comment left by "Dan Sawyer Cherry Picked Properties" at "17/03/2015 - 16:02":

No, certaily not in the foreseeable future anyway.

Rightmove, Zoopla and Prime Location have the vacant possession market sown up. The Property118 portal is aiming purely at the rental property niche as that will be of most interest to our members.
.

Ian Ringrose

16:15 PM, 17th March 2015
About 4 years ago

Mark,

Are you working with propertytribes on this, as they already have rightyielduk up and running?

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