During the course of my day to day activities I talk to a number of landlords. If you look on social media profiles you will probably find very few people, if any, who set their profile status as a landlord or claim to be one. As the market evolves with the Private Rented Sector having already outpaced the Social Housing Sector, I have noticed a shift in a new breed of investors entering the property rental market.
Many people in our part of the West Midlands, over the last few years, have seen the buy to let market become all about nest egg investment. It is fuelled by pitiful interest rates on building society savings and reflects the fact that building society savings accounts are paying half a per cent interest and pension returns are struggling to match expectations, turning more and more people into landlords to secure their future.
So what can you expect from your rental property investment?
In the short term, rental yields are important, and in Walsall, the average annual yield is in the order of 3.96% per year. However, that is based on averages, and as most landlords in Walsall tend to buy starter home homes, apartments and terraced houses, the majority of which are achieving well above 4.5% and up to 7.0% (sometimes beyond) per year depending on location and price in the Town.
In the long term though, the question of capital growth is as important, if not more important (because if you have great short term yields, but the value of the property doesn’t keep up with the rest of the market, you will have an asset that in real terms is dropping). The average property value in Walsall currently stand at £161,650. Property values in Walsall have risen by 15.2% in the last 5 years. On the other hand, property investment is a long term game, so I wanted to share with you the research I did for a couple of Walsall landlords.
Roll the clock back 10 years to 2006 when the average value of a property in Walsall was £148,055. 17 years back to 1999 makes really interesting reading, as the average Walsall property value was only £55,200, 30 years makes it£35,650 and just for a bit of fun, we looked at 1976 and it was £11,500!
However, if one looks at say a 30 year investment period, if you had put your £35,650 into the stock market in 1986 instead of buying a house in Walsall, your shares today would be worth £137,670. Put the same £35,650 money in a Building Society account and you reinvested the interest back into the account, your Building Society passbook would have £158,070. Compare that with the property market in Walsall and the property would be worth £161,650 today.
Not much difference to the building society until you realise that with the rental property you would have received in excess of £118,000 in rent over those 30 years, which you wouldn’t have received with the Building Society account!
I get great joy talking about property so, if you are thinking of investing in the Walsall property market contact me. You don’t have to be with me as a client and I don’t do the hard sell or certainly don’t charge for advice!! Just send me the Rightmove or Zoopla link of the property and I’ll gladly share my thoughts.
Phone: 01922 311016