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.