Friday, 14 September 2018

The Penicuik property market – ten years on from Lehman Brothers

 Can you believe this week marks ten years since Lehman Brothers collapsed and the dominoes of the late 2000’s financial crisis fell? The property market had actually been slowing before this, with the number of sales in the first half of 2008 down 40% compared to 2007. House prices had already dropped 10% too.

This trend accelerated though with Lehman Brothers demise. House prices fell a further 10% in the following six months, finally bottoming out in March 2009 (not that anyone knew they’d stopped falling at the time). This meant they had fallen from a high of £190,032 in September 2007 to £154,452 in March 2009; a drop of 19%.

Not coincidentally, in March 2009 interest rates were dropped to an all-time low (at the time) of 0.5%, where they were held for nine years. That’s a staggering decline considering they were still at 5% just six months beforehand, when Lehman Brothers went bankrupt. It’s quite the news story nowadays if interest rates change by 0.25%…back then we had six months in a row of them dropping between 0.5% and 1.5%!

Interestingly the average mortgage ‘SVR’ (Standard Variable Rate) in September 2008 was 6.95% (1.95% above the base rate) whereas it is now 4.1% (3.35% higher than the current base rate of 0.75%). So, compared to the stated base rate, borrowing money is actually more expensive now than it used to be - something which could be key if the base rate begins to rise.

It took until August 2014 for house prices in the UK to surpass the previous high of September 2007. During those seven years it was those in negative equity who faced the trickiest situation. With house prices retreating to levels last seen in April 2005, it was the property buyers between April 2005 and September 2007 who became trapped in their homes. For some this led to becoming accidental landlords so they could move on, whilst for others it meant having to wait out the storm.

Fast forward to today and the average UK property price stands at £228,384; 20% higher than the September 2007 ‘peak’ and 48% higher than the March 2009 low. Whilst you might have preferred not to buy between April 2005 and March 2009, anyone who did so should now have come out the other side ahead.

What still hasn’t recovered though is the volume of homes being sold. The record year for property sales in the UK remains 2006, with 1,581,727 sales. The following year there was a small dip of 6%, before the number of sales fell off a cliff in 2008, with just 765,313 homes changing hands (a drop of 49%!). A decade later and the volume of sales has recovered (to 1,098,215 in 2017) but are still well down on the levels seen in the years before the financial crisis.

For many it was the lowering of interest rates that helped them keep their homes; arguably stopping house prices from falling further. This, along with artificially pumping money into the economy, has led to asset prices becoming ever more expensive in absolute terms, whilst some will say it has only served to kick the can further down the road.

#penicuik #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #prs #privaterentedsector

Thursday, 16 November 2017

Another acquisition for the fast expanding Penicuik based The Key Place

The Key Place, the "go to letting agency" across Edinburgh and the Lothians, Central Scotland and the Scottish Borders, specialising in property management and buy to let investment, is delighted to announce that it has taken on PH Young’s letting business based in Bo’ness.

Robert Young, The Key Place’s Chief Executive, commented “We are delighted to have taken on PH Young Lets as, on top of it being an excellent, well run business, it enables us to consolidate our strength in property lettings across Central Scotland.  I can see this being the first of many acquisitions that we make over the next couple of years and, with the regulation coming into the sector next year, I expect that a fair number of property letting agencies will be looking to exit the market rather than go through the hassle of becoming regulated.” 

Thursday, 9 November 2017

Penicuik landlords owe more than £52 million!

The Brits can’t stop talking about property. The hot topic of discussion at the posh dinner parties of Mauricewood, Broomyhill and Milton Bridge’s movers and shakers is the subject of the Penicuik Property market, but in particular, buy to let. These people are buying up buy to let properties quicker than an ace Monopoly player ...... or so it would seem if you read the Sunday papers. So is the buy to let market a sure fire way to make money?  Is it something everyone should be jumping into? Is it a sure fire way to make money? Am I asking too many questions? The answer is Yes and No to all those questions!

Firstly, the government gives tax breaks to landlords, as it allows some mortgage interest payments on a buy to let property to be tax deductible. Also, a landlord only has to flick through Rightmove or Zoopla, pick any property at random and agree a price. Then, find a modest deposit of 25% (often by remortgaging their own home) which for an average Penicuik terraced house, would mean finding £38,830 for the deposit (as the average Penicuik terraced house is currently worth £155,319) and borrow the rest with a low interest rate buy to let mortgage.  Finally, the landlord would rent out the property in a matter of hours for top dollar and live happily ever after, with the rent then covering the mortgage payments, with loads of money to spare and come retirement have a portfolio of property that would have quadrupled in value in fifteen years. Sounds wonderful – doesn’t it? Or does it?

Let us not forgot that the half of one per cent Bank of England base rate is artificially low. The international money markets can be fickle and if interest rates do rise quicker and higher than expected because of some unforeseen global economic situation, that monthly profit will soon turn into a loss as the mortgage will be more than the rent. Even though tenants are staying longer in their rental property, tenants still come and go and my guidance to landlords is they should allow for void periods, plus the maintenance costs of a rental property and of course, agents fees ...... all things that eat into that profit.

Interestingly, by my calculations Penicuik landlords owe in excess of £47 million in mortgages on buy to let properties.  An impressive amount when you consider Penicuik only has 0.04% of all the rental properties in the Country. It really does come down to a number of important factors going forward to ensure you are water tight for the future. A lot of my existing landlords are fixing their mortgage rates. One told me that the Post Office are currently offering a 5 year fixed BTL remortgage rate at 2.74% for 5 years (based on a 75% loan). I don’t give financial advice, so you must speak with a qualified mortgage advisor...... but that sounds very fair!

However, one thing I do know is that buy to let is a long term investment, it’s a ten, fifteen, twenty year plan and property prices will go down as well as up. You wouldn’t dream of investing in the stock market without advice, so why invest in the Penicuik Property Market without advice? We give bespoke detailed advice to our landlords to enable them to spot trends in the Penicuik Property Market before others, enabling them to buy better properties at better prices. For example, did you know that terraced houses are selling for around 7.27% more than 12 months ago in Penicuik yet detached houses are selling for 4.98% more (with every other type in between). This means we can advise on which properties will go up in value better (or lose less if property prices drop), we can also advise which have lower voids and which properties have higher maintenance issues. 

Information on the local property market and ability to process it is the strongest asset we can give you. As Lois Horowitz, the famous author says, “Not having the information you need when you need it leaves you wanting. Not knowing where to look for that information leaves you powerless. In a society where information is king, none of us can afford that”. One place to find information on the Penicuik Property Market is The Penicuik Property Blog, where you will find many articles just like this.

#penicuik #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #privaterentedsector #propertyinvesting

Thursday, 2 November 2017

Property investing in Penicuik .... my 5 golden rules

As a landlord myself, I thought I would share some of my rules/tips on finding the right investment property for you in Penicuik and its surrounding areas.

Rule 1 -  location  

My number 1 rule is invest in a town you know. What better town to invest in than the town you grew up in? Now you will know which areas are high in renters and which areas are high in home owners. You will know where the schools are, local shops and importantly the transport links.

Think about the sort of tenant you want to attract – if you are looking for professional tenants then you will need to look at properties which are close to the centre of town. The properties you tend to get close to the town centre are flats or one/two bed houses.

If you are looking to attract families then you may want to look at property that’s away from the town centre with noise and traffic etc and find somewhere which is close to shops, schools and parks.  Penicuik offers plenty of areas suitable for both, you have areas such as Valleyfield, Rullion Road and Mauricewood to name a few and these locations are all great for rentals both families and professionals as the centre of town is not too far away but far enough from all the hustle and bustle.

Rule 2 - motivated sellers

I’m not sure what you think of when you hear motivated seller but what pops into my mind is someone who will take a very low price for a quick sale. When I say low, I mean anywhere between 10%-30% below market value.  Finding these motivated sellers is not easy, you can start by looking at how long a property has been on the market. Usually November seems to be a good time to negotiate the price down on a property as people want to be out and in their new home for Christmas. Another motivated seller is often someone who has inherited the property.

Rule 3 – the figures  

So we have established the sort of tenant you want, you now have the location and a list of motivated sellers. Now you need to make sure all this stacks up financially. At the end of the day you are in this to make money rather than breaking even or being in a loss.

Make sure you do plenty of research on the sorts of rents your potential investment property can achieve – my advice is to give my team a call and pick our brains. We are local to Penicuik and we are landlords. My team and I will be able to give you accurate numbers of the rents you can achieve in and around Penicuik. 

You will also need to set a buffer aside for unexpected expenses, usually this is general maintenance but we have had the odd boiler needing replacing which requires forward thinking. From my experience with my own properties and properties I manage, these often occur when you are undertaking works. Often other issues arise which need sorting out and this will always add more time to the job and it usually means you will go over budget.  But if you do it correctly then you will have a sound solid investment.

Rule 4 – Not a get rich quick

The Penicuik property market has gone down and up in the last 10 years and it’s very difficult to predict what the changes will be and if the prices will change.  As a landlord in Penicuik, think about the long goal. Use this as a plan for the future and the short term ups and downs will not affect you as much.

Rule 5 – Understand your market. 

This is similar to Rule 1 (location) however you can never do to much research, ring other landlords from Penicuik, speak to several local agents. The independent agents can make instant decisions there and then as the owner of the business tends to be close by (you will always find me in the office). They are more likely to sit down and give you their time, even if it means they get no business from it they just love to talk all things property.

There you have it, my 5 top tips to investing in Penicuik. If you are a seasoned landlord or you are just looking to start my team and I are always happy to chat about your goals and plans. We can point you in the right direction and even  accompany you on viewings so you have a second opinion.
If you find yourself passing our office then pop in (the kettle is always boiling). We have plenty of free parking available and I’ll even get the ‘posh’ biscuits out.

Our office address is based at 6 Bank Street, Penicuik, EH26 9BG. Many of my blog readers also email me with RightMove , Zoopla or On The Market links to look at and offer a second opinion so if that’s more convenient my email address is

Don't forget to visit The Penicuik Property Blog ( to view back dated articles about the Penicuik property market as well as property deals in Penicuik.

#penicuik #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #privaterentedsector #propertyinvesting

Thursday, 26 October 2017

Moving tips for Penicuik families with children

Moving home can be a stressful experience without a doubt. There may well be lots of excitement because of new opportunities over the horizon but there will also some major issues to consider. How do you get all your stuff packed up and moved safely? How are you going to make friends in your new location? Is it going to be okay?

Of course, the entire process is made a lot more challenging when you have children involved. Here are some of our top tips in making the trip from old home to new location go as smoothly as possible when you have children in tow.

Talk to your children

Adults can generally get their heads around, and cope with, change. For children, it will be more than just the challenge of packing up and moving from A to B. Not only could they be losing the friends they’ve made, there’s the prospect of starting in a new school and beginning over again.

Prior to moving, you need to make sure you talk as much as possible and get them used to the idea of moving. Of course, a lot will depend on the age of your children and how much they understand about this big change.

It can often be harder for teenagers because, for example, they have made long term friendships and have lived in the same place for a good while. Smaller children tend to have shorter attention spans but you might want to look out for tell-tale signs that they are stressed out and find a way to talk these through to put them at ease. Those under five still have a greater attachment to their parents and are usually the easiest to handle because they haven’t yet started to develop their own independence.

The good news is that social media and technology means that friends can remain in contact with each other a lot easier than in the past. It may not be the perfect solution but it can help, particularly older children, cope a lot better.

Getting the children involved

It’s important to get children involved with the moving process and packing up as much as possible. That could involve putting them in charge of their own room (nominally in the case of younger children!) and helping with the planning. It will make the feel part of the move and in control rather than simply having the change thrust upon them. Try to be as flexible as possible and don’t be too upset if your child suddenly loses interest and finds something else to do.

For much younger children, having them out of the way while you pack and prepare to move home can be a lot less stressful. That means you may need to call on friends and family to look after them while you get everything done. Even if your children are involved in the move, it’s a great idea to involve close relatives and family friends to help normalise the process as well as get that extra needed help.

Getting the children used to the new home and area

Where possible make sure the children have visited the new home a few times, point out their new room and ask their opinion on where things should go, what new items will be needed, should you decorate, by getting them involved they will develop a sense of ownership and hopefully excitement. 

Also, get the children especially the younger ones, used to the new area by, for example, driving past the new school and exploring the local amenities to show all the possibilities.
Visiting their new home and area before you move is one way to start getting your children used to the change.

Try the ‘is that a bird?’ approach once you have moved

Once you have moved, it is good to distract the children from the thought of having to move by, for example, getting them involved in activities in the new area or even getting them some new toys to play with. 

Finally, planning, understanding and accepting things not going right

Good planning and plenty of understanding go a long way to helping things run much smoother when moving home. Don’t expect everything to go like clockwork, though. That rarely happens with any move. Each child is different and they’ll react in their own unique way. For some it will be a worrying time, for others it can be a great adventure.

#penicuik #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #privaterentedsector #housemoving #housemovingwithchildren

Thursday, 19 October 2017

Are ‘would be’ Penicuik homeowners warming to the idea of renting?

I was reading a report the other day produced by the Halifax, about the UK property market and why more and more of the younger generation seem to be renting rather than buying. I find it fascinating that over the last 10 - 15 years, the British obsession of buying a house almost as soon as you left school, and the fact that if you rented you were seen as a second class citizen, has turned on its head to a point where the hopes and dreams to own a nice home will be replaced by the ambition simply to live in one.

In the latter half of the 20th Century, you left school, got a job, bought a small house and kept buying and selling property, constantly upgrading until eventually they carried you out in a box. However, the perceived shame and stigma of renting is no longer the case, as it seems that the British are now beginning to accept a lifetime of renting. This is a very important consideration for both Penicuik homeowners and Penicuik landlords as it will transform the way the Penicuik property ladder looks in the future and I might ask whether or not it will exist at all for some people? The make up of households is one important factor, especially in the Penicuik property market. The normal stereotypical married couple, two kids and dog of the 1970’s and 80’s has changed. More and more we have the need for larger houses where two families come together after divorces (+ kids) and need a property to house everyone through to an increase in the number of one person households.

Looking at the data for Penicuik, of the 901 private rental properties in the Penicuik Locality, 27.62% of those rented properties are one person households (249 properties). However, when we compare the number of one person Penicuik households who have bought their own property with a mortgage (i.e. therefore they are still in work), of the 4,705 owner occupied households in the area, only 355 of those properties are a one person household (i.e. 7.54%). Compared to a decade ago, this explosion in demand for decent high quality rental properties that one person households require has not been met with an increase in supply of such properties.  More and more I believe Penicuik landlords need to consider this change in the make up of Penicuik households, as I believe this could be an opportunity.

It is true that the Government’s introduction in 2013 of the Help to Buy scheme, where first time buyers only needed a 5% deposit, changed the perception of peoples’ ability to buy without having to save ten’s of thousands of pounds for a deposit. However, it might surprise you, 95% mortgages were re-introduced within six months of the Credit Crunch in late 2009, so again it comes down to people’s own perception. Many youngsters think they won’t get a mortgage, so don’t even bother trying.

Coming back to the deposit, it’s still a fact that once you start renting it becomes that much harder to save for a deposit, regardless of the size. Interestingly, 7 out of 8 renters polled by the Halifax (86% to be exact) refuse to sacrifice the quality of accommodation they currently live in to reduce the amount of rent they pay in order to save for a deposit.  This is the crux and the real reason why people aren’t buying but renting... and why demand for renting will continue to grow in the future (i.e. good news for landlords). Penicuik tenants can upgrade the quality and size of the property they live in for a minimal rent increase. The average rent of a two bed property in Penicuik is £700pm, but a three bed is only £150pm more at £850pm, whilst the average four bed rent is £1,000pm. If you had to make that jump when buying, the monthly mortgage payments would be stratospherically more than that! Without any social pressure and better quality rental properties compared to a decade ago, we will become a nation of renters within the next generation, as the UK is becoming more like Europe, where renting is ‘the norm’.

Who is going to supply all these properties to rent? Landlords! Whether you are an existing landlord looking to grow your portfolio or looking to become a ‘first time landlord’, my thoughts are take advice from as many people as possible. However, as the majority of landlords buy their buy to let properties in the same town they live, you will need specific advice about Penicuik itself.

One place for such quality advice and opinion is the Penicuik Property Blog

#penicuik #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #privaterentedsector #firsttimebuyers

Thursday, 5 October 2017

Opinion piece: The Key Place, Countrywide, Purplebricks and the changing lettings landscape in Penicuik

The lettings landscape is changing. 

It is changing as a result of the regulation of the sector being implemented by the Scottish Government.  It is changing because of the recent tax changes introduced by that historical figure, George Osbourne .... remember him?  It is changing because of the changing mortgage market.  And it is changing because of technology advancements.

Fundamentally, even with all this change, the lettings market is still a good place to be just now because current demand greatly exceeds current supply and this shows no sign of changing in the short, medium or long term as the obstacles to building more properties are so high that we will not be building enough properties to solve the problem for decades to come.

However, what will evolve is who manages letting properties and how they are managed.

At the moment there is great talk of national internet based letting agencies, like Purplebricks and Ewemove, being the next great thing and there is lots and lots of talk that large national office based letting agencies like Countrywide (called Slater Hogg & Howison in Scotland) being dinosaurs who will not survive (for what it worth, I personally suspect that Countrywide may well be more valuable if it is broken up .....). 

For me, technology will change the lettings market and the lettings industry must embrace technology so that it provides a continually improving service.  However, unlike selling tins of beans (which absolutely lend themselves to be sold by national and international businesses on the internet), ultimately lettings is about local knowledge and long-term relationships and personally I do not think that national letting agencies – whether internet based or not – can provide the same level of local knowledge, people skills and long-term relationships as local letting agencies like The Key Place.  The Key Place is a family run business with extensive local knowledge, people skills and long-term relationships with landlords, tenants, contractors, Councils, Penicuik etc which is invaluable in ensuring that lettings is done properly .... particularly when the ‘road bumps’ of lettings come along.

Keep it real, keep it local!

#penicuik #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #privaterentedsector #firsttimebuyers

Thursday, 28 September 2017

Home Buyers in Penicuik – Beware the Cost of 90% Mortgages

There are an increasing number of lenders willing to grant 90% mortgages to first-time buyers, but that doesn’t necessarily mean you should jump in without exhausting other possibilities.

You see, the cost of a 90% mortgage to first-time buyers compares quite poorly to those with a deposit of 15% or more; so much so that it could actually be beneficial to take out a separate loan to cover the difference.

Currently a first-time buyer with a 10% deposit can access a two-year fixed mortgage at a rate of 1.79%. Whereas having a 15% deposit in place would lower the rate on the same product to just 1.27% (meaning there’s 29% less interest to pay!).

If you’re reading this thinking a 0.5% difference in interest rates is negligible and all the mortgage rates seem very low, you’re right! But it can still make a real difference in the long-term.

Let’s say you’re thinking of buying a £125,000 house with a 10% deposit. On a repayment basis, you can expect to pay £465 each month towards the mortgage. But by raising your deposit to 15% those repayments would drop to £413 per month OR if you paid the same £465 a month as you were going to, the mortgage would be paid off three years quicker!

You may think you have little choice; and with the average property in Penicuik selling for £185,695, even a 10% deposit will require £18,570! But if you consider that by borrowing the additional £9,285 to step up to a 15% deposit could save you £77 per month in this scenario, you could actually afford to borrow this sum at 10% (interest only) to be no worse off.  

So even though the interest rates on a personal loan might be higher than a mortgage, the shorter length of the loan means you’ll pay it off quicker. This will boost the level of equity in your home, which will help when re-mortgaging in the future and could save you money in the long-term.  However, and it is a big however, certain mortgage lenders take a dim view about this sort of thing.

I’m not saying you should borrow more to stretch yourself and this certainly doesn’t constitute financial advice (you should consider contacting the registered professionals for that). But, I would urge you to ensure you’re accessing money as cheaply as possible to future-proof yourself and keep more money in your own pockets rather than in the banks coffers!

And, of course, there is another alternative although I appreciate that this is an unpopular thing to say .... give up some of lives ‘less essential’ ‘essentials’ and save the greater deposit.

#penicuik #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #privaterentedsector #firsttimebuyers

Thursday, 21 September 2017

Penicuik First Time Buyers – here are some helpful hints

If you are planning to buy your first home, you’re probably filled with a mix of excitement and, let’s face it, fear. This is a big, big commitment and you don’t want to get it wrong. You certainly didn’t spend all that time saving for your deposit just to throw it away on a few bad choices.

Buying a home is not easy, even for those who have done it before. Here of some of the things you may not have thought about but which could make the entire process go a good deal smoother.
Widen Your Choices
We often want to live in a certain area, either close to work or near to friends and family. Looking further afield, however, and really checking out the house prices can make a significant difference. For some, it can mean choosing between a cramped flat or a three-bedroom house for the same amount of money. Ideally, you want to search for an area that is on the up and up – somewhere that could be a great catch for new buyers in the years to come.
Choose Your Estate Agent Wisely
Don’t settle on the first estate agent you come across – look for someone with experience who is going to work with you and get you the best deal, not just protect their own commission. Ask for recommendations or check out estate agent review sites. AllAgents is a great place to start.
The Benefits of a Mortgage Broker
You might think getting a mortgage is simply about approaching your bank and asking for the loan. Mortgages can be a minefield and you want to choose the right one for your needs. A broker might seem like an added expense but they can save you from making the wrong decision. The rules are a little tighter now when it comes to mortgage lending, so a good broker is the best person to advise you on what will work and what won’t.

Learn Your Survey from Your Property Search
One pitfall new buyers often fall into is not understanding the difference between the solicitor’s property search and a home survey. The first includes all legal documentation about your property such as land checks. The second looks at the condition of the property and whether there are any expensive problems such as damp or damage that you should be aware of. They are both important.
Don’t be in a Rush

With so much competition from other buyers, you might be tempted to put in offers and get things signed, sealed and delivered as quickly as possible. It is important you love your new home, but getting carried away and rushing in could end up in tears. Bear in mind that this is going to be one of the biggest investment you make in your life and as much as a particular house may be “perfect” try to stay level headed.
Buying a house can be a long process and there are many different strains and stresses that will crop up during that time. If you are renting don’t hand in your notice until you are 100% sure that things are going through. There can be various delays, most of which you don’t have a control over.
As the old saying goes: Grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.
Get Covered
Finally, when the choice has been made make sure that you sort out not just your buildings insurance but your contents cover too, making sure your valuables are covered during the moving process.

#penicuik #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #privaterentedsector 

Thursday, 14 September 2017

Trend towards multiple property owning Penicuik landlords

I am seeing a couple of trends amongst our Penicuik landlords – both understandable and, I suspect, likely to continue. 

On the one hand, the more serious landlords are investing and buying more properties on the basis that, despite the recent changes and hassles in the Private Rented Sector, buy to let property investing is an attractive proposition. 

However, on the other hand, the ‘hobby’ or ‘accidential’ landlords are throwing up their hands in horror at these changes and are selling their properties.

It was interesting for me to have this anecdotal trend borne out by evidence. 

Whilst the number of rented properties across the Country is increasing from 4.9 million in 2015 to 5.1 million in 2017, the number of landlords across the Country is falling from 3.72 in 2015 to 3.72 in 2017.  This means that the size of the average landlord’s portfolio is 1.44 which is the highest level it has been since records began in 2005 up from 1.33 in 2015 and a low of 1.24 in 2010 (presumably due to the affects of the financial crash).  Another interesting stat is that in 2017, 73% of landlords owned one buy to let property which is a far less that the 86% it was in 2010.

So, what do you need to think about when you get into owning multiple buy to let properties.

Firstly, it is often more profitable and less risky to buy a number of properties than just one for the same outlay.  Not only that it gives you more flexibility and reduces the effects from voids; your risks are therefore reduced too.

If only one property is purchased a void period will result in no income for the investor.  However, if multiple smaller units were acquired the effect of one property being unoccupied is proportional to the number of properties held and a return on your investment will still be maintained.

Additionally, the overall achievable rental return is likely to be significantly higher across a portfolio of several smaller properties rather than a single investment in a larger one. In Penicuik, for example, rent from one £300,000 property would be £1,000 pcm but from 3 x £100,000 properties it could be over £1,700 pcm.

Time it right

In general there is upward movement in all aspects of the housing market and this makes property an excellent choice to consider for investment.  Your return on your investment is a mixture of yield from rent and capital growth, perhaps 6% and 3% respectively, so a potential annual ROI of 9% gross.

Maximise your profit potential by adding to your portfolio when property prices are rising, but aren't running away. In Penicuik we're currently experiencing a fairly 'flatish' sales market with prices increasing but not at an overly accelerated rate. Perhaps this is the future, but a steady 3 – 5% growth is healthier than boom and bust.

In addition, it's important to review the rental market as well.  Indicators of good timing for growing your portfolio would be when there's competitive tenant demand and rents are on the up (as this will automatically increase your yield).

Plan and prepare

The solid foundations of property portfolio success are often down to advanced planning and precise preparation…

Before investing you need to have your finances in place, plus you will need to have an overall long-term plan.  Taking advice from a qualified financial advisor as how best to fund purchases is essential.

It's important to identify why you're investing in an additional property and what you want that property to achieve.  For example, is it for a pension?  Are you hoping to increase your monthly income?  Is it for a long-term capital growth to use in the future?  Are you planning to live at the property in the future?

It's also essential to know when (and how) you're intending to exit the investment so that a clear and concise exit strategy can be prepared. Again talk to a financial advisor and tax expert before committing to portfolio growth so you can plan how to exit in the most cost-effective way.

Starting the search…

Although there is likely to be a multitude of properties available for purchase in your area not all of them will make the best rental investments so it's important to choose carefully.

When searching for your next investment, short-list several properties taking into consideration the following for each: location, price, potential renovation costs, suitability for the rental market, timescales before being rental ready, tenant demand, achievable rental return, potential for capital growth, plus where it will fit in with the rest of your portfolio. 

I am happy to have a chat with you before you start your search and/or once you have got your short-list.  Not only do I know the local property market but I also know what tenants want and need from a property, what's in demand and which type of properties are likely to be successful for investment purposes. In fact, as risk indicators are sometimes overlooked by those searching for a purchase, I can tell you what's wrong with a property as well as what's right.

Overcoming challenges

Of course having multiple properties isn't without its challenges.  Each element of the rental process will be multiplied… doubled, tripled, quadrupled etc.

Not only will you be dealing with the paperwork and maintenance of a number of properties, you will also be juggling the management of the people who live there, all of whom will have their own demands and needs.

Bear in mind too that there are new financial challenges. We're in year one of a four-year process to drop tax relief for landlords, plus an extra 3% Stamp Duty now has to be paid for each property bought for rental purposes.

So, how can a landlord make juggling multiple properties simpler?

By far the easiest way to manage an expanding portfolio with ease is to engage the help of a property management agent.  As industry experts they will thoroughly vet potential tenants, troubleshoot emergencies and issues and arrange necessary maintenance utilising our bulk buying power with our regular contractors.  They also understand and meet the current legislation, plus will keep on top of essential anniversaries, such as gas safety certificates.

All of the above becomes increasingly harder for a self-managing landlord as their portfolio multiplies but, if you engage the services of a property management agent, your involvement will be minimal.

Watch out for further information on this in future posts on The Penicuik Property Blog.

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