Top 10 rental investment hotspots

Some interesting research from QBGroup.eu takes an in-depth look at gross and real yields in the buy-to-let market – they argue that it is important for investors to understand the real yield which also takes into account the change in value of the investment property.

The analysis, carried out in February 2013, is based on typical 2 bedroom properties and combines changes in the capital values and gross rental yields to reveal a top 10 of property investment hotspots in the UK market for buy-to-let investors.

Reiza KR Qureshi, director at QBGroup.eu, said: “Most landlords appreciate that gross rental yields do not take account of the costs of maintaining, letting and insuring a property, yet many fail to consider the rise and fall of capital values in this equation. While we would expect the key rental hotspots to typically mirror economic activity across the country, the revelation in this new research is that the highest real yields are all in London. Despite the initial high capital costs, the combination of accumulating capital value and reasonable gross yields can make these areas look very attractive to potential investors.

“It’s also important to note that these top performing areas are all in central London, a specialised sub-market of the wider UK property market and one where many of its residents have survived the recession well. The people who reside in such areas have maintained their employment status and continue to enjoy a successful career path. Key demand drivers are equally about easy access to work and social networks. Shoreditch is a perfect example and the consistent high demand for such properties has kept both sales and rental prices on an upward trajectory.

“Given our new take on yields, at the other end of the scale there are areas of the UK where landlords are losing money just by owning the property, even if their properties not subject to void periods and attract healthy gross yields. For example, the real yield for Margate property at -9.8% is a real concern for landlords, even though the a gross rental yield is currently 5.1%.”

Top 10 Property Investment Locations – based on Real Rental Yields for 2-bed properties

Location	% change in average sales price vs. Feb’12	Gross rental yield	REAL YIELD
1 – Shoreditch	32.22%	4.33%	36.55%
2 – Bloomsbury	33.52%	3.02%	36.54%
3 – Bethnal Green	28.81%	4.89%	33.70%
4 – Elephant & Castle	27.78%	4.29%	32.07%
5 – Chelsea	28.14%	3.06%	31.20%
6 – Bermondsey	26.44%	4.54%	30.98%
7 – Battersea	25.00%	4.12%	29.12%
8 – Hammersmith	25.01%	4.02%	29.04%
9 – West Brompton	25.01%	3.81%	28.82%
10 –Vauxhall	25.00%	3.64%	28.64%

Richard Green (Research & Development)

QB Group Holding Co (UK)

 

 

What To Consider When Finding Your First Buy-to-Let Property

What To Consider When Finding Your First Buy-to-Let Property


So, you’ve decided you want to make the leap into buy-to-let investment.  Now comes the hard work – including finding the perfect property with which to begin your career as a landlord. Read our tips to find out what to bear in mind when choosing a potential rental.

1) Consider demand and target markets
Don’t just go for the cheapest property you can find. As an investor, you need to make your money work as hard for you as possible, so do your research and identify the areas where rental homes are in demand. It’s likely these parts of town will be well connected to road, rail and bus transport links and have a good range of local shops.

Also, don’t forget that different tenants will have different requirements. Students will want to live somewhere cheap and close to public transport that goes to their university, and will favour houses and flats with a few bedrooms so they can share the rent, while families are likely to prefer a quiet, low-crime area with good schools and decent gardens.

A good way to find out where’s best to buy is to speak us QBGROUP

2) Be specific with property features
As well as knowing your market, you should also know exactly what kind of property you want to buy. For example, if you’re looking to let to families, you’ll probably want to search for houses with at least three bedrooms, a good-sized kitchen and a large enough bathroom. You’ll also need to decide whether you’re prepared to do any renovation work.

This will help save time by narrowing your search and enabling you to go straight to estate agents with your requirements, so you only end up viewing the properties that you’re most likely to buy. This will also convey a professional image to agents, making them more willing to cooperate and speed things up.

Once you’ve decided on a property you want to buy, be sure to acquire as much information about it as possible, including its potential resale value once any renovation work has been factored in. Even if you intend to stay in the buy-to-let business for a while, the market and your own circumstances can change at any point, so it pays to think about these things in advance.

3) Know your budget – and stick to it
This might seem like a simple piece of advice, but it’s easy to get carried away and end up spending much more than you originally intended. Speak to a buy-to-let mortgage adviser about how much you’re likely to be able to borrow, and factor in costs such as legal fees and landlord-specific paperwork, as well as buildings insurance (you can find appropriate cover through companies such as Landlord Insurance.

Once you’ve chosen a property you want to buy, be sure you know what the likely rental income will be and weigh this up against your mortgage repayments. Also, if you decide to use a lettings agent to help you market and tenant your property, you will need to pay them a percentage fee, which is typically taken annually.

While this might seem like a downside, a lettings agency can be particularly useful to first-time landlords in taking care of the various tasks associated with renting out and maintaining a buy-to-let property, including many things that you’re unlikely to have already thought of.

Jonathan Robinson
QB Lettings & Management Co
 

Top Tips For Efficient Bathroom Planning

Top Tips For Efficient Bathroom Planning

When it comes to planning and designing for your home, the bathroom is arguably one of the more important rooms to make sure you get absolutely right. You will spend an awful lot of time in it and when guests come to stay, you can almost guarantee that they will see it! Therefore, you want to make sure it meets all of your practical as well as aesthetic criteria.

Think about the space

Before you choose the bath (if necessary), shower, toilet and sink, make sure you know where they are going to go based on where the plumbing is – and consider what else needs to fit in the space. Do you want a linen basket? In which case, you will need to factor in a corner. What about bathroom scales? Or perhaps a chair next to the tub if you have little ones who you will want to sit with at bath time?

It is also important to make sure you factor storage space into the design plan. There is nothing more unsightly in a bathroom than hairbrushes, numerous tubes of toothpaste and hundreds of bottles of lotions and potions scattered all over the shop.

Think about what needs to fit in the room so that you know what space you have to work with.

Choose the right fittings.

This is probably the most important part, and you may wish to enlist the help of a professional interior designer, or perhaps a friend with an eye for design, to ensure you pick the right fittings. Do you want a bathroom with a modern feel or are you more of a traditionalist? Ultra modern bathrooms can look out of place in older or listed property.

Curved edges, matte finishes and brass fittings tend to lend themselves to a more classic look. Sharper edges, chrome surfaces and twinkly lights will give your bathroom a brighter, more modern feel.

Furthermore, think about the alternative types of fittings – for example, are you part of a big family? If so, might a double sink be more appropriate than a single one?

Don’t scrimp

When it comes to plumbing and electrics, unless you are quite the Handy Andy, it is absolutely necessary to hire a professional to ensure everything is installed, fitted, connected, plumbed and sealed properly. Do your research and get quotes from several plumbers in London so you can make an educated decision and guarantee you hire the right person for the job. The last thing you need is spraying pipes, leaky grouting and a flooded hall when you come to use your beautiful new bathroom. A top tip to save money though is to try and plan the room so that you keep existing plumbing close to where it is. More pipe equals more money and more time, both of which cost more money!

The finishing touches

With all the units properly fitted, this is where the fun begins – see your bathroom as a blank canvas and the curtains, mats, soap dishes, towels and mirrors as your paintbox.

One of the oldest tricks in the book for making a room feel bigger is to use mirrors. The bigger the mirror, the more spacious the room is likely to feel. However, a word of caution – if you are going to have big mirrors, they must be kept gleaming, otherwise it will make the whole bathroom seem dirty, even if it isn’t.

All of these finer details should complement the period style of the fittings. For example, if you are going for a more traditional look, you may like to have a free-standing wooden loo roll holder. If you fancy a more modern feel, a chrome, wall-mounted one would probably be more suitable, for example.

Sara Kimberly
Interior Designer

www.QBGroup.eu

Rent To Rent The latest Passive Income Property Scam

Rent To Rent The latest Passive Income Property Scam

According to the Guardian newspaper another property scam is doing the rounds. Actually, this one is not new, but it is being heavily promoted at various property networking events. Most property networking events are now little more than places to market scams and dodgy ways of doing things, but that’s another story.

So the premise is that you find a landlord who owns a 3 bed 2 reception ( or bigger) property and rent it from them. You then split the property yourself into rooms and sublet  them as single rooms. A Typical 3 bed/ 2 reception property can in this way give an uplift in profit. This is often called multi-letting, HMO’s or just room lets. In this way, a naive landlord will not necessarily know they have been scammed.

Another way, which is being promoted openly, is to create different contracts such as commercial licenses for the prospective tenants- rather then a regular AST and do the above with the full knowledge of the landlord. The benefit to the landlord is a guaranteed rent and for someone else to manage their property, the middle man then takes the uplift in room by room rents as profit. Everybody wins. Except the tenant, oh yeah, and the landlord.

Now, just to be clear, I have nothing against multi-let or HMO property. I’ve written about it many times, and, if done properly, it is a great way to create a good steady income with very few void periods. A note of caution, just in case there are any council tenants reading this, it is illegal to sublet a council property.

Last night on Twitter I had a lengthy discussion with a couple of legal bods about this, who are already dealing with the fallout from these schemes. My own opinion is that sub letting is fraught with so many potential things that can go wrong that its hard to know where to start listing them! Here are a few off of the top of my head:

1. Tenants have no AST, meaning, if you need to get them out it can be extremely difficult.
2. If the original non resident ‘tenant’ or ‘manager’ disappears, the landlord is still responsible.
3. Most mortgage companies have clauses against sub letting. The person on the mortgage document could be repossessed and be sued by the bank.
4. Tenants have very little if any legal protection.
5. The landlord could more easily be prosecuted than the guy in the middle.
6. “Licenses” issued to tenants in place of AST’s are not worth the paper they are written on. As a landlord, you probably won’t have a legal leg to stand on, not to mention the cost in sorting out such a mess should it go wrong.
7. What about safety for the tenants. HMO’s have safety rules for a reason.
8. Sub letting without the insurers knowledge would invalidate the insurance.
9. Letting agents are being targeted to give info on landlords – for a cash bung.
10. If the mortgagee does not pay the mortgage, what happens to everyone in between?

In my experience, regardless of how much information is available, tenants still do not know their rights, and neither to many landlords. The rise of ‘accidental landlords’ can only exacerbate situations like this because of their lack of knowledge and experience. It is these landlords that will be targeted first.

If you were to set yourself up as the middle man, as these people are teaching, you will need to know how to manage huge amounts of tenants and landlords, not to mention the repairs, and let me tell you, there ain’t nuthin ‘passive’ about that! I wish folks would wake up and see that there is no such thing as a  ‘passive income’ in property.


As any HMO landlord knows, houses of multiple occupation take a bigger battering than single lets. Things get broken more regularly, and there is often a bigger repair bill for electrical items, boilers, plumbing, gardening and a myriad of other things.

As a landlord, if you can’t make money in a market that has high demand and higher profit than it has has been for years, then you should not be a landlord in the first place. If you allow someone else to control the asset, then you will probably lose out one way or another, it is really just a matter of time. Lastly, as my legal friend on Twitter said, “Rent To Rent is like watching a slow motion car crash.”

Reiza K R Qureshi
Director

QB GROUP 

A breath of fresh air in the student property market

Most people reading this will know that we are an advocate of the student property market here at Fresh Invest. With good management and an attractive property you can benefit from very high and secure rental yields.

With student demand increasing year upon year and a massive shortage in student accommodation currently available in the UK, it seems like Student Property is a great area for investment and many of our investors have been taking advantage of that fact and profiting

There are many different facets of student property available for investment and we feel that our Student HMO’s are the best opportunity out there right now.

Our latest Student Investment in Liverpool is ideal for those investors looking for large returns but still looking to maintain an easy exit strategy from the investment, with high capital growth.

We now have just 4 houses remaining from 9 in total on this development site and we expect them to sell quickly. The development was only released around 2 weeks ago and since then we have had significant interest in the properties.

Our Liverpool Student Investment was completely designed by us. The developer came to us at the end of last year looking for an idea of how best to develop out a piece of land he currently owned, taking advantage of its location. With our knowledge of the student market up there and previous experience of selling student property in Liverpool and the demand for that type of property from both investors and students, we designed a scheme with the investor in mind, minimising their exposure to risk, whilst maximising returns in capital and rental income.

The site lies within 2 miles of 3 major university campuses and just 2.9 miles from a fourth. With a bus stop just 100 metres from the development, communications with the university are great and students will have no problem getting to the various campuses

The investment provides the investor with the opportunity to invest just £57,000 and generate a net income of £15,310 per year, after mortgage costs, maintenance and management fees!

INVESTMENT BREAKDOWN:
6 Bedroom Student Town house.

• Price: £190,000
• Deposit @ 30%: £57,000
• Mortgage Amount @70%: £133,000
• Yearly Rental Income: £25,500
• Gross Yield: 13.42%
• Mortgage Cost @5%: £6,650
• Maintenance: £1,500
• Management: £2,040
• Net Return Per Month: £1,276 (£15,310 per annum)

If you would like some further information on any of our student property investments, please either use the appropriate contact form on the website, or send us an email at info@qbinvest.co.uk

Student Property Investment – The Facts

Student Pod investment has most definitely been the “buzz word” in property investment over the last year.
It seems new pod developments are being marketed on a daily basis but are they really all they are cut out to be?

Let’s look at the facts:

History of student property investment
Let’s start with the reason all of these private student halls are being built?

The 2010-2011 academic year saw grants for capital projects, such as new buildings, cut by 58% in cash terms to £223m. In the 2009-2010 academic year, universities received £532m for building works.

Because of this universities were not able to respond to the increased demand from students and had to start to rely on 3^rd party builders to satisfy that demand.

Student Pod developers can be easily classed into 2 different categories.

1. Large developers that are cash rich and can build out with their own funds:
This type of developer can afford to purchase a site, gain planning then forward sell to a fund at between 5-8% yields. Generally the developer will secure a FRI lease from the University for 25 years or so. The fund will then agree to purchase on completion.

2. Smaller developers or land owners that want to maximise their profit from land owned:
This type of developer/land owner generally either has an option on or owns the prospective land but does not have the funds to build out. They need to find 3^rd party funding outside of the mainstream. These are generally the types of development that are offered to the individual investors.

3^rd Party funding is provided by the investors who put down a percentage of the purchase price on exchange which is used by the developer in the construction process.

The absolute key to this type of proposal is to protect the investors deposit, this can be done by staging the tranches in which it is paid to the developer and making sure that a solicitor holds all deposits in a client account. For the developer to receive funds an independent architect would need to sign off each build stage.

How are they priced?
Good question, I will show you how they should be priced first of all.

1. You decide what you want to build, so self contained pods, houses or flats.
2. You work out what rental each room should achieve and the number of weeks they will be rented at
3. You then work out the monthly, then yearly income that can be derived from the site, taking away the maintenance and management fee to give a net figure, divide this by the yield you want to offer and this gives you a sale price.
4. Take away the agents fee and the site cost and you have net profit to the developer.

If the developer is happy with the level of profit then the investment goes to market, if not, it should be canned.

The Problem:
I won’t beat around the bush, its greedy developers or agents.

Normally when you get to point 4 above and it doesn’t work then it’s the end of the line, unless the developer wants to take less profit or the agent wants to take less commission.

What seems to be happening now is that investment companies use astronomical weekly rentals along with a high number of rental weeks to achieve higher rental returns, and in turn higher sales figures. Sometimes they guarantee this for a year or two but this is just worked into their profit.

I’m seeing a lot of opportunities that are advertised with a guaranteed return for 2 years but with absolutely no comparables to show what these pods will rent for after those 2 years.

An example, if we work to £100pw over 50 weeks -20% for management and maintenance = £4,000 (£40,000) on a 10% yield.

If this doesn’t work, increase the figure to £125pw over 52 weeks – 20% for management and maintenance = £5,200 (£52,000) on a 10% yield.

So you’ve paid £12,000 more for a property already, the developer can afford to guarantee this for 2 years because it will only cost him £3,000 if he rents at the figures of £100pw over 50 weeks.

The downside for the investor is that not only have they paid £12,000 more for the property, but their property will only be achieving a 7.6% yield after the first 2 years!

How would I know if the rentals are realistic?
A good investment company should provide you with full due diligence on the investment opportunity offered. It isn’t enough to offer a guarantee, you should be provided with comparables that show the rental being guaranteed is correct.

All investment companies should have conducted this due diligence as its service to you, if it’s not been done; you need to ask yourself why.

Don’t bury your head in the sand….You need to conduct your own due diligence as well, you can do this by phoning the university accommodation office and ask them about the area you are looking to buy the pod in, also speak to letting agents, its sometimes best to pose as an existing landlord, say you are looking to let your property and ask what you may get for it.

Is Student Accommodation sustainable and what happens if the market declines?
Whilst student numbers remain strong, yes it is. Liverpool universities showed an increase in student numbers last year and good quality student accommodation in favourable areas will always be in demand. What we will start to see is the death of the single landlord that owns a badly furnished house in an average area. I know when I was a student this was our only choice outside of halls. We will see good quality student houses and apartments that are regularly refurbished and well managed flourish but ones that are not will decline.

The management of student accommodation has moved forward massively over the last 10 years, gone are the days that a large percentage of landlords shied away from the student market; with a strong professional management company there should be no more hassle renting to students than there is to professional tenants.

QB Group
82 Great Eastern Street
London EC2A 3JF
T:  +44 (0) 8454 636 856
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F:  +44 (0) 2088 199 575
E:  info@qbgroup.eu
W: www.qbgroup.eu
W: www.qbinvest.co.uk

Barbados property – promised vs delivered

As construction continues at an admirable rate on our Barbados Property Investments, we believed now would be a good time to update investors with exactly how the developer did, with a picture of what was promised on one of our investments and what is being delivered as we near completion.

Ixora Resort is a development of ten one bed apartments and one, duplex two bed apartment. The development was priced very well by the developer and therefore sold out long before completion.
One of the real benefits for investors in Ixora Resort was the fact that, due to the low initial purchasing prices they make fantastic investments as well as an ideal holiday home. The rental rates on the west coast of Barbados are typically very high, so it does not take many weeks occupancy to make these apartments a very high returning investment. All of the apartments were sold as freehold condominiums with no usage restrictions, which is a rarity in Barbados, where many developments will limit personal usage to 5 weeks per year.

The developer of our resorts in Barbados does not just offer great prices, but they offer security when investing in their off-plan developments. They also offer an online area to each purchaser with details of any correspondence had with the developer, a running construction progress page and the ability to change the internal specifications of apartments from colour choices down to the relocation of non load bearing walls.
We have always felt that it is important, when investing off-plan, to invest with a developer that has long term plans for the area you are investing in. The developer of our Barbados investments has another 3 sites in Barbados, you can be sure they will try to satisfy every client’s best interest so that they are able to continue selling out developments going forward.

With this, we thought we would exclusively tell our clients that they have purchased another site and we will soon begin the marketing process on another great Barbados investment. The site is a beautiful south coast hotel which will be refurbished and turned into self-contained apartments, from studios to 2 beds. Prices will be kept low like their previous two developments in Barbados and the fact that this development is beachfront will only help it achieve sold out status even quicker than the last developments.