Investing in bricks & mortar

It began in 2014 when I first met Sue and Richard. They were rattling around in a large house after their children had flown the nest and were keen to buy something smaller. When selling they released additional funds from their sale and wanted to make this money work for them.

We suggested they use some of the surplus proceeds as deposits to purchase some investment properties and finance the balance with a bespoke mortgage. They were attracted by the prospect as the rent received from tenants would exceed related monthly mortgage commitments and other costs. Additionally, over time the rent received, and average property prices were likely to rise and the related amount outstanding on the mortgage would also reduce thus creating additional equity.

Beresfords helped identify specific locations offering high rental demand and strong potential for capital growth. Suitable properties were sourced and purchased over a 2-year period. Shortly after successful completion took place on each purchase, Beresfords then sourced high quality tenants who underwent stringent referencing before moving in.

At the time, the capital outlay from Sue and Richard was £337,250 in deposits and a further £100,000 in related costs, most of which would be recovered when the properties were eventually sold in the future. So in all, a total of £437,250. The balance was funded via a competitively priced mortgage arranged by Independent Mortgage Advisers, Flagstone, part of Beresfords Group.

History has proved that, from an investment perspective, bricks and mortar has consistently outperformed most other types of mainstream investment options over the medium to long term. The concept of Buy-to-Let has become much more prevalent over the last 15 years and the case study below reinforces the potential financial returns that can be achieved providing a sensible strategy is initiated at the outset.

Moving forward 9 years, we have recently reviewed the performance of their investment. The collective price paid for all the properties purchased was £1,349,000 and the current market value this now stands at £2,470,000. Therefore, in terms of capital growth alone the properties have increased in value by £1,121,000 over that period up 83%. Furthermore, the related mortgage outstanding has been reduced which in turn has created even more equity for Sue and Richard.

So, one must now ask that if the initial investment of £437,250 had been placed into something else would it have got close to producing the type of returns witnessed so far from bricks and mortar?

Increases in average house prices within Essex.

Our latest Buy-to-Let opportunities.

£130,000 |

£9,600p/a (£800pcm) | Yield: 7.3%

Hythe District, Colchester. Solid investment opportunity, this modern one bedroom property already has tenants in situ paying £800 pcm. Competitively priced offering a decent gross yield.

Asking Price: £250,000 | Rent: £16,800p/a (£1,400pcm) | Yield: 6.7%

Modern two bedroom apartment, well situated within walking distance of town centre and station (Crossrail). With en-suite to master bedroom and a separate bath/WC, the property would appeal to a wide audience of prospective tenants. Lease 138 years unexpired, current service charge circa £1,930p/a and ground rent £240p/a.

Want to find out more?

Of course, everyone’s budget is different but with investment properties starting in Essex from £130,000 then cash savings of circa £33,000 plus funding should be sufficient for someone to enter the Buy-to-Let market. Beresfords can deal with almost everything on a client’s behalf taking away any related stress allowing you to get on with everyday life whilst reaping the related financial returns.

For more information why not get in touch: buytolet@beresfords.co.uk