As the buy-to-let residential market continues to grow, South Wales is seeing a significant rise in numbers of “property portfolio investors” – high net worth individuals turning away from other forms of investment to put their faith in bricks and mortar.
Buy-to-let has been a steadily growing trend in the last few years, and inextricably linked to the fact that mortgages have been hard to get for first time buyers while returns on conventional savings have struggled to match inflation.
But while a high proportion of landlords have just purchased one or two properties, we are seeing a huge appetite from “portfolio investors” looking for anything from five to 30 properties.
Wales has been one of the big winners of this new trend because of the relatively low property prices here compared to other parts of the country – combined with buoyant rentals.
Terraced houses and apartments are in big demand for renting regionally, and these can typically be purchased from as little as £75,000 – with cash buyers at a big advantage when it comes to negotiating.
The upside for the local economy, and the housing sector in particular, is that this has directly resulted in a number of new developments being brought forward by builders confident that they can sell them on quickly – even “off plan” in many instances – to investors.
Critically, these new homes are helping to ease the housing shortage locally, although no one would question that many more homes do need to be built to meet the long-term demand.
Typically, property portfolio investors are seeing annual returns of anything from five to seven percent depending on the investment, even after maintenance and management costs have been accounted for. Added to this, of course, there is the very real prospect of capital growth as the economy continues to pick up.
So where would we advise anyone with a spare million or so to look? There are some excellent opportunities to buy into blocks of new properties in different parts of the region, but also a wealth of individual houses where some real bargains are waiting to be picked up.
And our top three tips to prospective portfolio investors?
1 Take advantage of local knowledge before you take the plunge – knowing what to buy and where to buy are critical if you are not to lose out on income streams by having letting voids.
2 Get your properties really prepared for letting – presentation and quality of maintenance make a massive difference in the level of rental achievable, and in attracting the right sort of tenant.
3 Finally, be prepared to look away from the trendy postcodes for the very best value. With everyone’s budgets under pressure, professionals looking to rent are now looking at houses and apartments in less fashionable addresses. To know exactly where, of course, takes expert advice – and that’s where we can help!