Making money from property investment is entirely possible, if you do your research first.
Things such as rental yield, town planning and area demographic all affect whether your investment will provide a solid return over time.
With Hull an up-and-coming city, ideal for families, students, and professionals alike, it’s an attractive option for anyone seeking to start their property investment journey. Here’s how Hull property investors can make sure they’re on track for a solid investment
1. Know the regeneration plans for Hull
Investigate the latest regeneration plans for Hull to find out which areas are likely to offer better returns. Buying property now in underdeveloped areas that become the focus of regeneration projects, means the property value and rental demand is likely to increase over time.
For example, the huge Albion Square development is set to spruce up a major part of the city centre. This means more professionals are wanting to live nearby to minimise their commute to work. The project includes some residential homes, too, meaning a new build investment opportunity that offers low maintenance costs and high demand for tenants.
2. Decide on your ideal tenant (and buy accordingly)
Knowing who you want to rent to will affect where you buy and what type of property you invest in.
For example, families tend to be the most long-term tenants as they stay in place to see their children through school. Professionals are the second longest, while students typically rotate year-on-year. You’re more likely to get a great return on student accommodation or HMOs (Homes of Multiple Occupancy), but the time investment in managing a higher tenant turnover and the costs of empty homes in the summer holidays could impact your profits.
For example, the Cottingham Road and Avenues area is close to the university. This means it’s a perfect spot to invest in student accommodation.
On the other hand, Kingswood and Longhill are appealing for families, while professionals are drawn to the city centre and marina.
The property type is also important. Families prefer houses, while professionals opt for one or two-bedroom flats. Students enjoy group accommodation so converted houses in HMOs or purpose-built student properties are a good choice.
Who you want to rent to will also affect your renovation and furnishings budget too. Professionals demand a much higher standard of finish, whereas students are less fussed about smart wooden floors and sleek kitchen cabinets.
3. Pick your property management needs
Decide whether you want to manage the property yourself, give full responsibility to an estate agency, or operate somewhere in-between.
Privately managing a property is cost-effective as you pay no agency fees. However, your time will be in demand and you’ll also be responsible for the referencing of prospective tenants.
HMOs and student accommodation tend to be very time-intensive. More people to a property means more contracts, higher tenant turnover, potentially more problems, and chasing rent from several individuals. You may want to employ an agency to fully manage the property for you. They’ll take a larger cut(about 20% of the annual rental income)but HMOs can deliver higher returns than single-family or professional couples as tenants.
4. Work out your rental yield
Rents in Hull are not that much lower than other areas nearby such as Leeds, but property prices are much lower. This means you can find a property offering a great rental yield more easily.
A good yield at present is anything over 5%.
Work out the rental yield by taking your annual rental income, divide it by the purchase price of the property, and multiplying by 100 to get the percentage.
For example, let’s say you buy a two-bedroom apartment in Hull for £150,000 and the average rent is £650 per month (£7,800 a year). That’s 7,800 / 150,000 = 0.052. Multiplied by 100 gives a rental yield of 5.2%.
Use a buy-to-let mortgage expert
The returns you can make by investing in Hull property can be great, but only if you keep your costs low. Your buy-to-let mortgage is the biggest cost involved in your property investment so make sure you’re saving money on that wherever possible.
Get advice from your local Hull mortgage experts who have access to a wide range of deals. We’ll guide you through the buy-to-let mortgage application process and make sure you’ve got the right insurance policies for your purchase too.
Contact your Hull mortgage adviser on 01482 470444 or book online to arrange your appointment.
Find out more about our Mortgage Advice service in Hull