Friday 20 November 2015

Darwen Buy To let – Freehold House or Leasehold Flat? an 116% Increase in Value offers food for thought, but beware of high service charges, says Paul Ainsworth-Lord. Local Property Expert. Sales and Letting Agents in Darwen

Beware of excessive service charges
Darwen Buy To let  – Freehold House or Leasehold Flat?

 Well my Darwen Property Blog reading friends, as seems to be all the rage with Jeremy Corben asking the PM questions emailed in to him at Prime Minster Question Times, I to wish to answer a question emailed into me from a potential Darwen landlord last week. 

Nice chap, lives in Tockholes, and it turns out, after having a coffee with him, he works in IT, has a spare bit of cash (now the kids have flown the nest) and wanted to buy his first buy to let property. 

His main question was ... 
"Do I buy a freehold house or a leasehold flat in Darwen?"


Well, most people will say freehold every time, especially the southerners, because you own the land and there are less issues with financing (but only when there are less than say 80 years left on the lease).

However, it’s not as simple as that (it never would be would it!). 

The definitive answer though is to research what tenants are looking for in Darwen and in which areas. The tenant is ultimately your customer, and, if they don't want to rent what you decide is best to buy, then you are not going to have a successful BTL investment. 

So starting with the tenant in mind and working backwards from there, you won’t go far wrong. In a nutshell, find the demand before you think about creating the supply.

Leasehold flats and apartments in Darwen are excellent in many respects as they offer the landlord certain advantages, including the following:

  • Flats can be initially cheaper to buy. 
  • Yields can be quite good, offering better cash flow. 
  • The building will already be insured and yes there is a service charge, but it’s still for a service at the end of the day and that cost is spread between many others (i.e. when your freehold house roof goes, its falls 100% on your shoulders) 
  • There is often no garden to maintain or blown down fences to replace! 

However on the flip side we have to conside these points too:


  • Whilst in the past Darwen leasehold flats can have seen some fabulous capital growth, I do expect they will struggle to compete with the more traditional types of housing stock going forward, but hey that's only my opinion..  
  • Service Charges - Now this is the thing to watch for as some leasehold properties have no cap on the level of the service charge and it may get out of control - service charges on the apartments up off Anyon St and on Clearwater Village up Marsh House are as high as £100 per month! which seriously impacts on the yields. 
  • The length of the lease will significantly affect value if not renewed before it gets too short (not really an issue here in Darwen). 
  • Thankfully there’s not many, but some Darwen apartments/flats have burdensome clauses. 
  • Finally, with leases, there can be sub-letting issues – which means you can’t let them out.

So what do the numbers look like? 

Well since 2003, the average freehold property in Darwen (detached, semis and terraced) has risen from £80,527 to £137,837, a rise of  71% 

whilst the average Darwen leasehold property (flats and apartments) has gone up in value from £43,238 to £93,813, a rise of 116.97%

I was really interested to note that of the 8,113 rental properties in the Blackburn with Darwen Borough Council area that the Office of National Statistics believe are either let privately or through a letting agency, 1,482 of them (or 18.3%) are apartments. 

However, there are only 6,852 apartments in the whole council area (be they owned, council rented or privately rented), which represents 11.9% of the whole housing stock in the area. 

This really intrigued me that, quite obviously, there is a high proportion of Darwen’s leasehold apartments/flats rented to tenants compared to detached, semi’s or terraced. Fascinating don’t you think? - But do remember, every Darwen apartment block, every terraced house or semi is different. 

Like I said at the start, the definitive answer though is to research what Darwen tenants want in the area of Darwen they want. Demand for apartments, within easy reach of the town centre and near good transport links can be popular and can offer the Darwen landlord very good yields with minimal voids. 

However, Darwen terraced houses and semis, whilst not always offering the best yields (although sometimes they can when chosen correctly), they do offer the Darwen landlord decent capital growth. 

My advice to the prospective landlord as it is to you is do your homework.  

One such website, which only talks about the Darwen buy to let Property Market, is this one.... www.DarwenPropertyBlog.com

Another source of info many Darwen landlords use is me! 

What many Darwen landlords do, irrespective of whether you are a landlord of ours, a landlord with another agent or a DIY landlord, if you see any property in Darwen, that catches your eye as a potential buy to let property, be it a terraced house, semi or flat ... email me and I will email you back with my thoughts (although I will tell you what you need to hear .. which might not be what you want to hear!)

So if you want a second opinion why not get in touch (or register for my blog updates by filling in the simple registration form on here). 

Why not call in for a coffee (we only do nice coffee)..

My office is right in the Darwen Town Centre, opposite the Darwen YourMove office:

Ainsworth Lord Estates
49 Market Street
Darwen BB3 1PS

there's plenty of parking.

or you can:

ring me for a chat on 01254 760660

ping me an email: Paul@AinsworthLordEstates.com

Looking forward to it.

Paul Ainsworth Lord
Darwen Property Expert
Sales and Letting Agents in Darwen and Blackburn 

Saturday 7 November 2015

Anchor Estate Darwen, Unsold Opportunity... Reduced! 8.8% Yield - "This should have sold by now," says Paul Ainsworth Lord on Investing in Buy to let opportunities from Estate and Letting Agents in Darwen

This is still available and I don't understand why?

It's been a busy week this week and I was just checking the Darwen property market activity on Rightmove and Zoopla to see if there was anything I had missed.

I came across a few surprises, but one that stands out in particular...

Reduced!

I wrote about one particular property about 3 weeks ago, tipping it as a good buy. It's up with our friends at the YourMove office across from us here in Darwen.

http://darwenproperty.blogspot.co.uk/2015/10/anchor-avenue-darwen-8-yield-and-safe.html

I'm surprised to see it's not flagged as sold. In fact it was subsequently reduced by £5k from £80k to £75k..


The crazy thing is it has a nice and bonny yield of 8.8% with potential to increase this further. It's a no-brainer!

Here' it is:





Have you all spent up?

I think you guys need to check this out, and if you have concerns as to why it hasn't sold give the agents a ring see what they say? Are there problems we can't see in the pictures etc?

Pretty much every property I write about gets snapped up, usually by Landlords and Investors i have spoken to.

Bottom Drawer Secret Property Deals... 
 
If you spot any other properties you're interested in drop me a line or call in for a coffee (we only do nice coffee!) I can discuss some off market investment properties I've got in my bottom drawer.
These are properties that the owners (mostly retiring Landlords) are looking to sell discreetly, that won't go on the market. I have a steady supply of these and they're all producing nice yields.

You know where I am..

Paul Ainsworth-Lord
Darwen's Local Property Expert

Ainsworth Lord Estates 
49 Market Street
Darwen
BB3 1PS

(There's plenty of parking)

Ring me on 01254 760660 or ping me an email to:

Paul@AinsworthLordEstates.com




Tuesday 3 November 2015

Beware of the fees on Auction Deals - Wood Street in Darwen, It's in the auction for a reason!

Auctions - Buyer Beware!

We're seeing more and more Estate Agents partnering up with Auction Houses across the UK and Darwen is getting it's fair share of stock too for the auction rooms.

I get Landlords and Investors calling me all the time to ask about various properties they've seen listed for auction and I'm always happy to offer my opinion. Given I know every street in Darwen I can usually offer some good advice on what I think.

I got a call last Friday about this one on Wood Street, here....

Auction Property - Wood Street Darwen


It wasn't a lengthy chat but here's a few of the points we discussed...

Now with this one there's a few things to keep in mind.

Firstly alarm bells should ring - simply because it's in the auction. It's in the auction for a reason! (Not that I'm cynical or anything!)

Local Knowledge is Key.

Now luckily, I'm very familiar with this short row of properties here on Wood St, including the one next door to this.

Non Refundable Fees

If you're thinking of putting a bid on this bear in mind you will have to pay a buyers premium of upto £6k (some or all of which is non-refundable). So don't forget to add this to your purchase price.

Issues....
No doubt you'll have studied the pictures? Yep, it has a list of issues... which need sorting before any responsible Landlord or Agent would rent this baby out. If housing standards made a visit they'll be leaving you a list of jobs for sure.

So on top of your bid we have to add the buyers premium and the cost of remedial works...

Do I think it's work looking at? Well, given the numbers - errr No! 



That was pretty much my take on this one.

The other thing to note about properties in auctions - read the Legal Pack thoroughly.  

If you like gambling then auction properties are probably up your street, but for most people I advise they avoid them alone. Ive seen too many people buy at auction and get their fingers burnt.  Auctions are for the seriously experienced investor.

If you have got your sights on an auction property in Darwen or this area, get in touch. You never know it could save you making a big mistake!

You know where I am...







Paul Ainsworth Lord
Darwen Property Expert 

Ainsworth Lord Estates
49 Market Street 
Darwen
Lancs BB3 1PS

or call me on 01254 760660

or ping me an email...

Paul@AinsworthLordEstates.com