We have a lot of clients who, in their initial conversations with us suggest they want ‘as many bedrooms as they can’ for their budget. And this seems logical – right?
When you bought a home for yourself and your family you probably did the same, space is valuable.
Equally, if this is just a personal choice or specific strategy, our specialist will help you do this while giving you the stabilizers and boundaries to keep you protected in your choices.
So why is starting with the size of a property considered a poor strategy?
To look at this let’s take it to the extreme.
Why are you investing in the UK? Because it’s one of the lowest risk investments, with consistent returns. It continuously grows, there is a supply and demand issue pushing prices up.
If the size is important, there are much bigger available at your budget in another country. Equally, in England, while overall it performs exceptionally well on the world stage. There is of course areas with zero government investment, massive unemployment and very cheap property.
Even in the best cities, take Manchester as an example. Overall performing very well, but there are areas that are underprivileged and have property types that will not grow in value.
Never invest without undersupply, over demand, growing wealth and affordability in an area or you have a high chance of being burnt.
The point of all this is, this is an asset you are investing in. This is not your own home it’s your future money. Sometimes we have to forget that it has doors, windows or a roof. Take the emotion out and look at the numbers.
The most successful investors work off spreadsheets, not images.
You have to look at yourself and decide whether the number of rooms is an emotional decision or a financial one. If a 3 bed at the same price delivers a better return than a 1 bed, buy it.
Equally, if the 1 bed delivers more than the 2,3, or 4 bed over the period of time you are planning to own it for, that is the investment.
The final point to make on this is in reference to our video called ‘Are city centre properties the safest investments?’ which you can find on our website or by looking back in these videos. Sometimes getting into the safest and highest returning locations means you will have a smaller property than in the outskirts.
If this delivers more returns, with more occupancy, your life will likely feel a lot more relaxed!
Get more information by contacting one of our specialists at Baron & Cabot.
Most of us grew up with the ethos of buying property as our first investment, and if you are in Europe getting a mortgage and paying it off as soon as possible. After all, why should we pay interest on the money when we can clear it off.
With investment property, however, the solution is different. With a buy to let property, we look at lending like business leverage.
Imagine for a moment you have a mortgage that offers a deposit of 1/3. The property is worth £150,000 and you deposit £50,000 with the mortgage, paying the rest.
- Your tenant pays the rent which in turn pays off all your bills and the mortgage.
- Now not only is your mortgage being paid off, but you also have some income above that.
- Even better the average UK property grows at 4%.
If using some investment strategy we get 5% per annum, but have only invested 1/3 we get triple the returns, meaning we get 15% return on investment per annum before we even account for the rental income.
For more mortgage information including why all international clients can get a mortgage see our other videos linked below the video or on our website.
It’s relatively straightforward to google properties in England, there are probably tens of thousands in each area of the UK. Using a bad broker is as bad as not using one at all, it makes very little sense in using a poor broker.
With a company like Baron & Cabot, you have to understand why the major funds, financial advisors and most experienced and largest investors in the world use us.
It is unusual for a client to have a data analytics team to source the best stock, a team in England trained in property for due diligence and an economy of scale to purchase at volumes which demand discounts.
We are working in property 24/7 meaning that we are hugely experienced in delivering consistent returns, if we couldn’t we wouldn’t have major investment firms working with us for years, 42% of properties bought by repeat investors and a global network of some of the most experienced staff.
We take a commission but it’s from the discount we get for you, this is why you should always speak to us before you make a decision. Our specialists will give you support and will never try and sell a property in the initial meetings.
Accurately predicting the future value of UK property is something which Baron & Cabot have been recognised for many years. From our early days where we partnered with several UK universities to predict, through to now where we have advanced machine learning and AI systems and teams managing them.
Before you go out and hire 4 staff to start predicting property values there are some really simple first steps you can take, the same ones we do when we need to do a very quick prediction on a property we are looking at.
With UK property, like with people, looking at its history can give you most of what you need to know about a properties future.
The UK has so many investors because it is so transparent. Every single property sale is available, and Baron & Cabot have gone even further in having every transaction since 1995 and the size of every property.
We get these reports monthly, though as an individual you can log on to the website at the bottom of this website and very simply run a report of the last 15 years for the postcode you desire.
Download this to a spreadsheet and run a pivot table to group the average price by year.
From this point, we can quickly look at how much an area grew in value for the last 2 years, 5 years, 10 years and 15 years. For low risk take the lowest growth per annum and use this as your baseline.
After you have this growth figure you can make some judgements if it will grow above its lowest average with any of the growth factors in the video ‘How do I pick a property in England? / The secret to always finding the best UK property investments .
The best way to check how good the quality of finish of a developer will be is by looking at their previous finished properties online.
There will almost always be a finished property for sale on Rightmove or Zoopla or up for rent where you can check the images of the finished project. Alternatively, ask a member of staff at Baron & Cabot for internal images or videos of previous properties.
Developers will very rarely change the quality of finish if it is the same contractor being used. As the developer will get discounts on volumes of materials bought, if they tend to do a higher quality finish, this will generally not change as their suppliers will still be supplying the same quality fittings.
Deciding between the number of bedrooms you should be investing in is another one that is specific to your budget and the specific area we are investing. At this stage, it’s like asking what cars are faster red or blue ones, without context its impossible to answer.
Historically investors only wanted to buy 1-bed apartments as they are so easy to rent out, though this has changed quite a lot over the last 10 years or so.
For example in Birmingham, Manchester and London, 2 beds or even 3 beds have become more popular. Due to the increased costs of rent in these cities, professionals are sharing better quality properties in core city centre rather than getting their own place in lower quality development and further out of the city.
This has meant that in some of these locations a 2 bed can achieve a higher yield than a 1 bed, and are marginally quicker when selling.
Budget is really important here, buying into a better performing city is much more important than having more bedrooms. If you are not sure about this look at the area that you live in and consider how much cheaper a larger property would be in a run-down area. If your starting point is property size and not return on investment your investments will not be consistent.
Buying off-plan or completed property is a great question and one which comes up a lot. As a company who works on both, there are some plusses and minuses on each.
The biggest issue with the off-plan property is making sure it will be complete on time and making sure you have the correct processes in place in case of a large problem arising.
Even with completed property, there are unknown issues you can come across if you don’t know the history of the property or who built it.
In both cases, working with a reputable company that can show comprehensive due diligence is important.
At Baron & Cabot we have over 100 checkpoints we look at on any property before we decide to work on it. We have to reject a lot of properties when they are unable to meet such a stringent checklist.
This means that if it is off-plan we not only check the finances, track record and delivery of every contractor and developer working on the project, but also have in place full refunds if the development has a significant delay.
In addition to this, almost every project has the money invested held in escrow or fully insured to make sure our clients have full protection.
While we have never needed to use this it is critical to have it in place.
So why do people choose off-plan over completed property?
Normally there are four major factors:
- You tend to get quite large discounts by investing early. For most developments we have negotiated 5-10% discount off-plan, we retain a large proportion of the remaining properties which go to estate agents at higher prices for owner-occupiers.
- If you only need to put down a 20% deposit, get a 10% discount and the property value grows 5% it’s one of the best investment periods you will have. Your ROI without any mortgage or tenants to deal with is huge,
- You get the pick of the properties in a block,
- All of our new properties have 10-year build warranties so you shouldn’t have any major costs of repairs.
Like anything, you should start by speaking to one of our specialists and looking at both options and the ROI v’s delay risk for both. We build this into a cash flow for you so that it’s really simple to see which would perform best for your specific circumstances.
This question comes up a lot and is generally based on confusion between where you would like to live and what is a good investment.
The simple answer to the question of whether to buy a house or an apartment is “whichever gives you the highest return” though we can look into some of the basics of why investors prefer each property type.
For a start, most investors who buy property live in houses. Therefore many of the newer investors believe that houses are more popular and have the potential to extend to make additional money. Some investors like the idea of having a freehold house so will initially believe that they only want to work with the small number of freehold houses.
Before you decide it is highly recommended that you look at investment without pre-conceived ideas. Any ideas you do have make sure you can back them up with data and facts, otherwise, you are making an emotional purchase with a high chance of weakening your decision making.
UK property is simple as we have up to 100 years of data. Want to know the % of apartments vacant compared to houses, we have that data, want to know the % of leasehold properties in a city, we have that data, want to know the average earnings of people in an area, the supply v’s demand, the ethnicity, population density, average growth over the last 25 years, the size or type of windows in any property of the UK – WE HAVE THAT DATA!
One of the benefits of apartments for example is they tend to be in prime city-centre locations. If there is a large plot of land a developer can either build 100 apartments or 6-8 houses on the same plot, then the houses will have to be very expensive to justify this.
This naturally makes the premium areas, where you have the highest population density, and lowest vacancy rates almost entirely apartments. This means that more experienced landlords, pension funds etc tend to focus on apartments in city centre locations as they provide the simplest investment case.
Choosing before you have looked at all of your options would be a poor strategy. Have a free one to one with a Baron & Cabot specialist so you can ask questions, get the relevant reports and start to decide what type of investment suits what you are looking for.
What does buying a property cheap mean to you? Is it that it is the lowest priced, biggest property you can get or is it that it is a property that is lower priced but gives you a high return?
It’s important to get this distinction as novice investors can make a lot of mistakes when trying to buy cheap.
It makes a lot of sense to limit your investment on the first purchase you make, but equally, it is naïve to think that the cheapest properties are going to perform the best.
If you are looking at lower-priced properties, first watch our video on ‘How much do I need to invest in UK?’ .
Your main focus should be working out your budget, be very realistic here. What exactly are you willing to spend. Then work out the areas which will give you the very best returns for your investment.
Ignore the size of the property in many respects or the number of bedrooms. The main focus is Return on investment.
Remember rental yield is a direct reflection of risk. Buy in the best city centre location and you will get a lower yield.
There are some great locations at lower prices though, some of the great target locations are those within 30 minutes of Manchester or Birmingham. The North East of England can throw up some additional options with higher yields but you can be sacrificing overall return for similar pricing.
If you want to look at cheaper properties, look at the outskirts of growing cities, aim for locations where a new tram line or train line is being built and watch your investment flourish.
In the UK the mortgage process is really simple. Initially, you will be partnered with one of our mortgage specialists. This will be based on your nationality as each specialises in different client countries.
You will then go through some basic questions such as income and outgoings. The broker will give some basic ideas of the types of mortgages you can get, but then actually speak to each bank for you.
After 24-48 hours they will come back with confirmation of the best rates for your specific circumstances and the property.
You can also request an official ‘Decision in principle’ where the bank will give you a document to confirm they will lend to you based on the information they have.
At this point we would start the mortgage process if the property is completed, or if its being built we would start the process 2-3 months before completion.