Buy-To-Let - Is Falmouth a good place to buy?

We have recently been speaking with a number of landlords entering the buy-to-let market about the importance of a balanced portfolio, when buying and renting out property.  The balance between buying properties that offer good monthly returns (high yields) but quite often offer poor capital growth (i.e. they don’t increase in value that much over the years compared with the average) versus properties that do go up in value more quickly but often offer a lower yield.

Rental prices in Falmouth range at the lower end from around £500 per month for a studio apartment to around £1400 for a large 4 bed detached house (not including the student market). An average 3 bed semi-detached house can be rented for around £825 pcm depending on location and quality.  As is well publicised, Falmouth is a popular choice with people relocating from other areas and good quality residential rental properties are in high demand.

So, does that mean you should buy a property in Falmouth as a buy-to-let investment?  Before we can answer that, you must really consider the capital growth vs yield question. Some buy-to-let investors often make the mistake of chasing yield over capital growth.  Some investors believe that by chasing high yielding properties, in say the less popular parts of Falmouth, they will make a faster profit than waiting for capital growth.  The problem with this is that to achieve a high yield you usually have to compromise on capital growth.

Therefore it would seem the most logical solution is to find a high yielding property in a strong capital growth area but these simply do not exist.  This is because there is generally a contrary relationship between yield and capital growth so the higher the yield, the lower the capital growth and the higher the capital growth, the lower the yield. Property investment in Falmouth is about balancing the two.

Not many landlords, especially those who use buy-to-let mortgages, can afford to service high levels of debt without a reasonable yield, which forces them to look at ways of making an investment affordable by finding the right balance between capital gain and yield.  

Yield is critical to the survival of a buy-to-let investment but it’s not the key to building wealth. Don’t chase yield for yield’s sake, but rather chase capital growth with enough yield to make it serviceable because in the long term it is the capital growth, not the yield that will generate you the wealth and the financial independence you may be seeking.

Belvoir Falmouth don’t sell property - we are lettings specialists, but we do give advice on what might make a good buy-to-let investment in Falmouth and the surrounding area. We don’t charge for this service but we would like to manage your property and help you find great tenants.  Call Annabel Leach on 01326 210304 or drop in to our office at 46 Killigrew Street, Falmouth for a chat.

Essential Questions to Ask Before Choosing a Letting Agent

Belvoir Lettings Falmouth reveal the essential questions you should ask an agent before signing on the dotted line...

Offering valuable services for landlords both experienced and new, a good property management agent can form a key part of your property investment strategy. And with a nationwide surge in lettings – and an influx of new agents entering the market on a monthly basis – there are certainly plenty to choose from... but making the right decision is essential for your property portfolio success.

“You need to ensure that the person or company you are trusting with your investment is going to provide you – and your future tenant – with the level of service you both require,” explains Annabel Leach of Belvoir Falmouth.  “A poor agent can potentially lose you a great tenant and cost you a lot of revenue if the service they provide isn’t of a high standard.”

So, how do you know which agent is the right one for you... and your property?

Key question 1: How will you advertise and market the property?

It is important to ask this question as you need to see that the company you choose will market your property in as many different ways as possible.  This will ensure you attract many quality tenants in a short space of time and help avoid the dreaded ‘void’ when a property is left unoccupied.

Will your agent use all available media?  For instance, do they have a highly-optimised website and will your property be seen on Rightmove, and the other popular property web portals?  How about a ‘To Let’ board to attract on-street attention and a window display at the agent’s office to further support this?

And let's not forget social media either.  Used creatively, Facebook and Twitter can let homes.

Key question 2: On average how long does it take for you to let a property?

Understanding how long it will take to find a tenant allows you to plan ahead.  Perhaps you need to complete some maintenance work before re-letting?  Or, importantly, you may need the rental income to pay your mortgage or other bills.

Another important factor is your asking price.  If you have time on your hands you can possibly hold out for a higher price. But, if you need to let quickly, you may have to be more realistic about the price you are asking.

Key question 3: Do you do credit checks?

“You need to make sure that the agent will do in-depth checks on prospective tenants so that the risk of the tenant falling into arrears is minimised,” says Annabel.

“At Belvoir Falmouth we carry out credit checks using Experian as this gives us an in-depth report of a potential tenant’s credit file and previous addresses.  It also shows if they’ve ever received a CCJ or have been declared bankrupt.  We also seek employment references to confirm their income, plus landlord references if they are currently renting.

 Key question 4: Have you already got a waiting list of tenants looking for properties?

You need to ask this question as many agents will claim to have tenants waiting for a property but are these claims genuine?  Does the agent register and pre-qualify applicants?  A pro-active agent will discuss the needs of all prospective tenants (applicants) in order to ascertain if they are serious motivated movers or 'serial lookers'.  If the agent takes time to talk to every caller they will gain vital information, such as where the tenant wants to move to, why and when.

Key question 5: How do you ensure you’re up-to-date with current legislation?

Asking this question is vital because if your agent isn’t keeping up-to-date with legislation, then it could potentially make you vulnerable... especially if the tenancy turns sour.

At Belvoir we actively make sure we are kept up-to-date with changes to lettings legislation. Our Central Office provide many staff training days that are available for us to attend and they keep us informed of any changes enabling us to ensure that our documentation fully complies with legislation.

Key question 6: How often will you visit the property once tenanted?

“This is a great question to ask because there are some agents who don’t carry out periodic inspections on properties,” says Annabel.  Checking on a property is advisable and we find this a great time to catch up with our tenants and see how they are getting on. It is also a good opportunity to assess any repairs that need to be addressed.

At Belvoir Falmouth we do our first inspection within two months, then continue to carry out regular inspections throughout the tenancy.

Key question 7: What services do you offer that go beyond the usual services expected from an agent?

Some agents will offer more services than others, so it’s definitely worth finding out exactly what they offer... or don’t.

For example, some will offer an out-of-hours emergency phone line for tenants, while others may provide use of their contractors for maintenance issues.  Perhaps the agent is happy to carry out viewings outside of office hours, or will make themselves available to accompany you to court in the event of an eviction hearing?  Maybe they offer educational workshops and seminars for landlords, or perhaps they are happy to advise on potential investment opportunities in the local area?

Each agent will offer their own bespoke range of services... but without asking the important key questions it’s impossible to access whether the agent you have short-listed to manage your property will effectively fulfil your needs.

Key question 7: How can I be sure my money is safe?

The best bet for a landlord is to use an agent that is a member of a professional body such as The National Approved Letting Scheme (NALS) or The Association of Residential Letting Agents (ARLA).  To become a member, the agent has to have their accounts audited regularly by a qualified accountant and has to hold Client Money Protection Insurance, so if there are any problems, liability to clients is covered.   You can check if your agent is in NALS or ARLA by searching at www.nalscheme.co.uk  or www.arla.co.uk . 

A good letting agent will also be registered with an ombudsman scheme such as The Property Ombudsman see www.tpos.co.uk .  Lettings and property management agents who join the TPO also subscribe to the Code of Practice for Letting Agents. 

 20 questions to ask an agent before you commit – at-a-glance ticklist

1.         What are your rates?  Does that include VAT?

2.         How do you advertise and market your properties?

3.         Do you put up a ‘To Let’ board?

4.         Have you got your own website and/or phone app?

5.         What kind of rental return can my property achieve?

6.         Have you already got a waiting list of tenants looking for properties?

7.         How long does it take for you to let a property on average?

8.         How do you do credit checks?

9.         How long have you been established and what is the company history?

10.       Do you advise on investment opportunities?

11.       How do you ensure you’re up-to-date with current legislation?

12.      How quickly will you start marketing a property once a tenant gives notice?

13.       How often will you visit the property once tenanted?

14.       Do you have an out-of-hours emergency service?

15.       Do you have trusted contractors or tradesmen that you use?

16.       How often will you communicate with me and the tenant?

17.       What’s feedback like from tenants and landlords? Do you have any testimonials?

18.       Have you won any industry awards?

19.       What services do you offer that go beyond the usual services expected from an agent?

20.       What trade organisations do you belong to?