I was talking to a chap who lives in one of those new modern 4 bed detached houses that have recently been built on the Leigh Road, just past Parmitier Drive.
Whilst he lived in a brand spanking new 4 bed detached, he wanted to know if it was a good investment for a Buy to Let. He felt comfortable in Wimborne, as he had lived there for years, and he wanted to invest in the area that he felt was his own.
I thought I would investigate for him, and to find out if he was going to make a wise investment for his recently acquired inheritance, or if he was just emotionally attached to Wimborne, as he had grown to love it!
Interestingly, I found out that over half the homes in Wimborne are detached (54.91%), which seems a lot until you compare it with neighbouring Broadstone (81.73%).
However, this is something that just would not happen today, if we were going to build a new town, the price of land would mean that more semi's and so called town houses would be built! (You only have to look at Poundbury to see what has been built, and what is being built!)
Anyway, with that in mind, as he had come into money, he wanted to buy a property in the immediate area to let out. It would be his first Buy to Let property and so I found out that there was over 78% of owner occupied housing in Wimborne, much higher than the national 66%. So, approximately only 10% of housing in the area he wanted to invest in was rented! Nationally, the figures read about 15%.
Whilst he lived himself in a nice four bed executive house, I based my research on a new to market 4 bed with an asking price of £550,000. Based on average rental income for a 4 bed detached (£1500 approx) the highest yield he could expect was only around 3.27% per year.
However, the larger four bed detached properties in the area have had price increases of 12% over the past 5 years, so if that was maintained his initial investment of £550,000 would have a decent capitol return.
Investing in property is a balance between decent capital growth and decent yield. I was able to tell him that a 3 bed semi detached house, still in Wimborne, can be bought for around £360,000 and they rent for around £1000 per month, a similar yield of 3.3% per year, for a not so similar investment.
A little left over to go and take up that Bath Travel Cruise offer.
It all comes down to personal choice.
Each landlord, as this chap will now become, has different priorities for their buy to let investments, and a balance needs to be struck between investment and yield.