In­vestors re­turn to the mar­ket, but they’re a very dif­fer­ent breed

Cash-rich in­vestors are back, but what are they buy­ing and where? Sharon Dale re­ports.

Yorkshire Post - Property - - PROPERTY -

MAK­ING money from bricks and mor­tar was easy when prop­erty prices were ris­ing and buy-to-let mortgages were plen­ti­ful.

But both pro­fes­sional and am­a­teur in­vestors dis­ap­peared al­most overnight when the credit crunch was fol­lowed by the re­ces­sion.

Now they’re back, tempted by dis­tressed sales, some bar­gain prices and the hope that prop­erty will give them a higher re­turn on their sav­ings than the banks will.

They’re not just buy­ing to let for the long-term ei­ther.

Some are tackling ren­o­va­tion projects and sell­ing re­fur­bished homes on for cap­i­tal gain.

“Of the in­vestors I deal with, half are buy­ing to let and half are buy­ing prop­er­ties in need of ren­o­va­tion to sell on,” says David Phillip, head of In­vestor Ser­vices at Dacre, Son and Hart­ley.

“What we are see­ing a lot of is peo­ple with money in the bank, some of them re­tired, who are looking to buy two or three houses.

“They aren’t earn­ing much in­ter­est from the banks and feel that prop­erty could of­fer a bet­ter re­turn.

“They’re looking for at­trac­tively priced re­pos­ses­sions or prop­erty at auc­tion.

“Quite a few of th­ese peo­ple are first time prop­erty in­vestors

Gone are the in­vestor clubs and the get-richquick guys from the South.

and if they’re buy­ing with cash and not wor­ried about mort­gage in­ter­est rates go­ing up, they’re happy with a four per cent yield on a buy-to-let.”

Other clients, who have bought to ren­o­vate and sell on, are hop­ing to make up to 20 per cent profit.

“The key to suc­cess is buy­ing right and we ad­vise clients on what work they might have to do on a prop­erty to bring it up to stan­dard, how much they can ex­pect to make in rents or re-sale,” says David, who be­lieves that the num­ber of dis­tressed prop­er­ties has risen in the last six months and be­lieves that re­pos­ses­sions will rise again af­ter the elec­tion.

An­drew Wells, of val­uers and auc­tion­eers All­sop in Leeds, says to­day’s in­vestors are very dif­fer­ent to those we saw at the peak of the mar­ket in 2004 to 2007.

He adds: “In­vestors buy­ing now are cash-rich, they de­pend less on buy-to-let mort­gage fi­nance, partly be­cause it just isn’t there or is too ex­pen­sive, but also be­cause the re­turn they can get is now far bet­ter than cash on de­posit.

“In­vestors to­day are more savvy. They have done their re­search and know what lets well.

“Gone are the in­vestor clubs who bought city cen­tre flats, gone are the get-rich-quick guys from the South and gone is the am­a­teur who has spot­ted a band­wagon.

“In­vestors now are buy­ing prime stu­dent houses but not fringe.

“They are also tak­ing ad­van­tage of good ten­ant de­mand in city cen­tres where prices can now de­liver re­turns of seven or eight per cent.

“They are also buy­ing fam­ily houses in good qual­ity lo­ca­tions.

“Our Fe­bru­ary auc­tion (UKwide) saw 90 per cent of the 355 lots sell rais­ing £42m.

“Many of the lots were res­i­den­tial in­vest­ment prop­er­ties and this demon­strates clear de­mand for in­come.”

For­mer Prop­erty Woman of the Year Teresa Gal­ley, an in­vestor and let­tings agent in Don­caster, agrees and says there is a feed­ing frenzy in the Don­caster area for cer­tain types of prop­erty.

Teresa, who runs Gal­ley Prop­er­ties and has a port­fo­lio of 30 lets, says: “In­vestors are buy­ing again and I have no­ticed there is a big in­ter­est in HMOs, houses in mul­ti­ple oc­cu­pa­tion or shared prop­er­ties.

“There’s a short­age of that type of prop­erty and so­cial hous­ing isn’t meet­ing it.

“It’s not an easy rental sec­tor to deal but the re­turns can be good.

“There are also peo­ple buy­ing to ren­o­vate and sell.

“There are bar­gains out there and they are at­tract­ing a lot of in­ter­est. “It’s a good time to buy.” But Teresa, who is re­gional rep for NLA, adds a note of cau­tion for novices who are in­vest­ing for the first time.

“I’ve had quite a few first time in­vestors who want to take their money out of sav­ings ac­counts and put it in prop­erty and they’re ask­ing for ad­vice.

“It’s quite scary be­cause they re­ally don’t ap­pre­ci­ate the scale of what they’re tak­ing on with a buy to let.

“They haven’t fac­tored in main­te­nance costs, the cost of voids and agents’ fees, plus they don’t have a clue about the leg­is­la­tion sur­round­ing rental prop­erty.”

She adds: “They are looking at the mar­ket through rose-tinted glasses and they need a re­al­ity check.

“Prop­erty can bring fi­nan­cial re­wards, but it’s not easy money.”

FEED­ING FRENZY: In­vestor and agent Teresa Gal­ley says there is new de­mand for cer­tain types of houses in the Don­caster area.

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