Great video as always! Generally I agree with your conclusion and given getting started is the hardest step in property investment being able to enter at a much lower price point can really help people build momentum and confidence, it doesn't matter what you do really as long as you do something. I haven't been able to shake off my IT job yet so for me time is the limiting factor and hence prefer to buy at a higher price point in locally to me in London, I wouldn't look at 1 bedroom period conversions as they achieve the lowest yield, instead I look for 2 bedroom flats in good looking purpose built blocks that need some work, typically achieving a CoCR similar to your northern example. Keep up the great work :)
I really don't think you can extrapolate the price appreciation over last 10 years with a stronger economy and lower interest rates outside London into the next 10, as Brexit is harming jobs and ensuring that rates remain high amidst high inflation. So the price appreciation argument could very well look different in 10 years.
Hi Ben. The economy has been the same for all regions. I’m not trying to persuade you either way just show you the data and invite you to do your own checks based on the same data. I still would invest in London but if it’s just for capital growth you could get a similar result for a lot less out of pocket. Who would have thought that ten years ago?
Another benefit to buying multiple units comes when considering the exit plan. Individual properties can be sold over several years, potentially reducing the amount of capital gains tax paid.
Fantastic video as always! Can you do a video on investing strictly in one bedroom apartments/flats in London vs North of England? I am thinking of starting small as i am a first time home buyer. I think the maintenance fee/ operational costs for one bedroom BTL will be cheaper in the long-run What do you think?
Thanks for the kind words. On flats the issues are the service charge and lease length. But if you buy one that has no service charge or ground rent and a long lease then it’s a lot better deal.
Appreciate the video as always. Your video has broken down my thought process entirely and this is the way I am trying to go, but the problem I am facing right now.. I have had two offers accepted around the 250k mark and one is a 3 bed large apartment with a 999 year lease in a nice area in the midlands + a 2 bed ground floor apartment with communal pool and gym. The 3 bed has an EPC of a D - Solid brick built in the 1920's - the other is fine EPC of a C. The rental income I hope to achieve from each one is £1500pcm. The service charge on the 3bed is £2500 per annum and the service charge on the 2bed is £4500 per annum. I'm struggling to get a 5 year fixed at a sub 5% rate so how are you achieving 3.89%? I am being quoted 4.79% with really high in the sky product fee of £8500 and if the product fee is lower the is my broker is asking 5.84% - are the taking me for a mug or is this just the way the market is atm.. that being said, if so how are we to make anything. I've ran the numbers and I'm only getting an ROI of 2.93 & 1.17% on the other.. is the juice worth the squeeze atm. Thanks for taking the time to read
I thought the same as you as I’m also seeing similar circa 5% rates with sky high fees. Not sure how he managed to bag those rates (or when?) and also could be ignoring the product fee.
The mortgage rate was just a quick Google I did when I was editing the video. There is a large fees on some of them but the mortgage was with mortgage works. Try looking at freehold property instead of flats. The service charge and sinking funds can be all over the place from year to year especially if the blocks are badly run. Thanks for your thoughts on it. I hope you get what you want on the mortgage front.
Thanks for the video Steve, 61% growth in London is the lowest, agree. However, in absolute terms London returned a higher amount ie 450k-280k=170k., so more money in your pocket.
It’s relative to the purchase price, but the point is you’ll need more cash down to buy in London, plus you can achieve a higher growth outside it with less money down.
But does it! Not if you look at average capital growth. What London has is demand, so you know it will always rent and you can sell anything there. The amount of investment in terms of growth is the same. The key is manufacturing some sort of profit through development in London, then that’s a whole other discussion.
Why London flats vs terraced houses elsewhere? I understand it's about opportunity cost and you could buy a terraced house vs a flat in London but you should show both stats and explain the rationale - else this seems misleading.
Yeah I should have explained why I did that in the video. Reason was because the cost of a one bed flat determined I could buy 3 terrace properties with the £111k down. The type doesn’t matter so much as it’s an example. The point was, if I’ve got £111k where would be a better investment. I hope that makes sense.
Great video as always! Generally I agree with your conclusion and given getting started is the hardest step in property investment being able to enter at a much lower price point can really help people build momentum and confidence, it doesn't matter what you do really as long as you do something. I haven't been able to shake off my IT job yet so for me time is the limiting factor and hence prefer to buy at a higher price point in locally to me in London, I wouldn't look at 1 bedroom period conversions as they achieve the lowest yield, instead I look for 2 bedroom flats in good looking purpose built blocks that need some work, typically achieving a CoCR similar to your northern example. Keep up the great work :)
Hi Alex. Thanks for your comments. Your strategy seems to be working well if you can achieve close to 10% yield on purpose built flats in London.
I really don't think you can extrapolate the price appreciation over last 10 years with a stronger economy and lower interest rates outside London into the next 10, as Brexit is harming jobs and ensuring that rates remain high amidst high inflation.
So the price appreciation argument could very well look different in 10 years.
Hi Ben. The economy has been the same for all regions. I’m not trying to persuade you either way just show you the data and invite you to do your own checks based on the same data. I still would invest in London but if it’s just for capital growth you could get a similar result for a lot less out of pocket. Who would have thought that ten years ago?
Another benefit to buying multiple units comes when considering the exit plan. Individual properties can be sold over several years, potentially reducing the amount of capital gains tax paid.
Good breakdown of Capital growth etc..only issue up north I found was tenants paying rent consistently due to lack of high paid jobs .
Thanks Bob for the feedback.
Fantastic video as always!
Can you do a video on investing strictly in one bedroom apartments/flats in London vs North of England?
I am thinking of starting small as i am a first time home buyer.
I think the maintenance fee/ operational costs for one bedroom BTL will be cheaper in the long-run
What do you think?
Thanks for the kind words. On flats the issues are the service charge and lease length. But if you buy one that has no service charge or ground rent and a long lease then it’s a lot better deal.
Appreciate the video as always. Your video has broken down my thought process entirely and this is the way I am trying to go, but the problem I am facing right now.. I have had two offers accepted around the 250k mark and one is a 3 bed large apartment with a 999 year lease in a nice area in the midlands + a 2 bed ground floor apartment with communal pool and gym. The 3 bed has an EPC of a D - Solid brick built in the 1920's - the other is fine EPC of a C.
The rental income I hope to achieve from each one is £1500pcm. The service charge on the 3bed is £2500 per annum and the service charge on the 2bed is £4500 per annum. I'm struggling to get a 5 year fixed at a sub 5% rate so how are you achieving 3.89%? I am being quoted 4.79% with really high in the sky product fee of £8500 and if the product fee is lower the is my broker is asking 5.84% - are the taking me for a mug or is this just the way the market is atm.. that being said, if so how are we to make anything. I've ran the numbers and I'm only getting an ROI of 2.93 & 1.17% on the other.. is the juice worth the squeeze atm. Thanks for taking the time to read
I thought the same as you as I’m also seeing similar circa 5% rates with sky high fees. Not sure how he managed to bag those rates (or when?) and also could be ignoring the product fee.
The mortgage rate was just a quick Google I did when I was editing the video. There is a large fees on some of them but the mortgage was with mortgage works. Try looking at freehold property instead of flats. The service charge and sinking funds can be all over the place from year to year especially if the blocks are badly run. Thanks for your thoughts on it. I hope you get what you want on the mortgage front.
Thanks for the video Steve, 61% growth in London is the lowest, agree. However, in absolute terms London returned a higher amount ie 450k-280k=170k., so more money in your pocket.
It’s relative to the purchase price, but the point is you’ll need more cash down to buy in London, plus you can achieve a higher growth outside it with less money down.
And that’s totally fine, maybe is worth clarifying that big pocket money still makes sense to invest in London versus investors with limited budget
But does it! Not if you look at average capital growth. What London has is demand, so you know it will always rent and you can sell anything there. The amount of investment in terms of growth is the same. The key is manufacturing some sort of profit through development in London, then that’s a whole other discussion.
Why London flats vs terraced houses elsewhere? I understand it's about opportunity cost and you could buy a terraced house vs a flat in London but you should show both stats and explain the rationale - else this seems misleading.
Yeah I should have explained why I did that in the video. Reason was because the cost of a one bed flat determined I could buy 3 terrace properties with the £111k down. The type doesn’t matter so much as it’s an example. The point was, if I’ve got £111k where would be a better investment. I hope that makes sense.
Will the EPC C thing actually happen do you think? All Rental properties to be EPC C by 2025
Yes it will happen. I think March 2025.