I had an interesting email from someone
in Royal Tunbridge Wells a few weeks ago that I want to share with you (don’t
worry I asked his permission to share this with you all). In a nutshell, the
gentleman lives in Rusthall, he is in his mid 60’s and still working. He has a
decent pension, so that when he does retire in a couple of years’ time, it will
give him a comfortable life. He had recently inherited £350,000 from an elderly
aunt. One option he told me was put it into a savings account. The best he
could find was a 2 year bond with the Post Office which paid 1.9%; meaning he
would get £6,650 in interest a year. One of his other options was to buy a
property in Royal Tunbridge Wells to rent out and he wanted to know my thoughts
on what he should buy, but he had concerns as he didn’t want to take a mortgage
out at his time of life. He was also worried about all the tax changes he had
read about in the papers for landlords.
Notwithstanding the war on Royal
Tunbridge Wells landlords being waged by George Osborne, the attraction of bricks
and mortar endures for many. As our man is a cash buyer, he would not have to
deal with the intricate cut to
mortgage interest tax relief that will diminish, or even eradicate,
the profits of many Royal Tunbridge Wells landlords. It’s true he would face
the extra 3% in stamp duty to buy a second property, but with some good negotiation techniques,
that could soon be mitigated.
I told him that buying a Royal Tunbridge
Wells buy to let property is all about the total return on investment. True, he
could put the money in the Post Office bond and receive his interest of £6,650
a year or, as he rightly suggested, invest in property in Royal Tunbridge Wells.
The average yield (yield being the
equivalent of the interest rate on the property) at the moment in Royal
Tunbridge Wells is 3.35% per annum, meaning our potential F.T.L (First Time Landlord)
should be able to, depending on what he bought in the town, earn before costs £11,725
a year. (However, I told him there are
plenty of landlords in Royal Tunbridge Wells earning half as much again (if not
more), if he was willing to consider more specialist investment types of
properties – again, if you want to know where – look at my blog or drop me an
email).
The bottom line is that the success of
investing in Royal Tunbridge Wells buy to let property versus a savings account
with the Post Office (or whatever Bank or Building Society is offering the best
rate) will depend on the performance of those assets. Unlike with a savings
account, with property the capital you invested can also go up (and yes, it can
go down as well – more of that in second). Property values in Royal Tunbridge
Wells have risen in the last twelve months by 8.4% meaning, that if our chap
had bought a year ago, not only would he have received the £11,725 in rent, but
also seen an uplift of £29,400 …meaning his overall return for the year would
have been £41,125 (not bad when compared to the Post Office!).
..
but the doom mongers amongst you will say, property values can go down,
as they did in 2008, and in 1988 and 1979. Yes, but after 1979 prices had
bounced back to their ’79 levels by 1984 and went on to grow an additional 58%
in the following four years. Then again, they dropped in 1988 and did take 13
years to reach back to those ’88 figures, but the following six years (between
2001 and 2007) they then increased by an additional 66%. Now, according to the
Land Registry, average property values in Kent currently stand 10.42% above the
January 2008 level, and anecdotal evidence suggests that in the nicer parts of Royal
Tunbridge Wells, we are well above these sorts of levels. Therefore, all this
talk of property crashes is unfounded.
… and what would that £350,000 get you
in Royal Tunbridge Wells? A superb 2 bed apartment in Molyneux Park Road, a
really nice 3 bed semi in Hawkenbury or a decent 3 bed detached in Rusthall..
in fact, the world is your oyster. But which Oyster? Well, my blog reading
friends, if you want to read similar articles like this and what I consider to
be the very best of buy to let deals in Royal Tunbridge Wells, irrespective of
which agent is selling it, then you need to visit the Royal Tunbridge Wells Property
Blog
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