Are High Yield Properties Too Good To Be True?

Update:  We've moved our blog to www.folkestone-estateagent.co.uk


I'm going to be a bit controversial here, remove my letting agent hat and talk to you as a landlord and a property investor.

I often speak to new and existing landlords who have called the office to ask about a particular property that they've seen for sale online.  I'm always delighted to have these conversations firstly because I'm human and I enjoy sharing my experience and expertise, but also because nine out of ten new landlords aren't yet switched onto this inconvenient truth:

95% of High Yield Properties Don't Deliver on Capital Gain

And that's why I'm so happy to talk to landlords about their potential purchases before they buy them.  For those of you who aren't already nodding your head in agreement, let me explain.


High Yield Properties Tend To Exist on the More Affordable Side Of Town.

Yes, there are exceptions to this rule, but in the majority of cases this is a universal truth.  Taking Folkestone as an example, three bedroom properties are in high demand and low supply in the whole of the rental market, making them an ideal investment opportunity at the right price.  Let's compare two properties, one in the affordable side of town and the other near the fast train to London.

Invicta Road, Folkestone	Limes Road Folkestone
Price: £140,000 (Update: Sold for £138,000*)	Price: £385,000
Expected Rental PCM: £700	Expected Rental PCM: £995-£1100
Estimate Gross Yield: 6% (*6.09%)	Estimate Gross Yield: 3-3.5%

So Invicta Road massively outperforms Limes Road in terms of gross yield, and in fact you could buy two three bedroom houses on Invicta Road for the price of Limes Road and make potentially twice the yield.  Wow!  If you're simply looking for a short term investment which outperforms the bank then Invicta Road is worth a look.

What About Capital Gain Then?

Let's look at two similar properties, of the same size, on the same streets and see how much they've sold for in the last ten years…I know which option I prefer for capital gain.

So there we have it - High Yield and Capital Gain are in most cases mutually exclusive when you go to the extremes.  There is, however a sweet spot in between and other ways to get your capital gain… but that's a story for another day.

If you'd like more information about the Folkestone Rental Market then download our report or give us a call on 01303 212797.

BTL Property of The Week

Three Bedroom End of Terrace in Invicta Road, Folkestone

Important: We've moved our blog to www.folkestone-estateagent.co.uk


6.18% Yield on Invicta Road, Folkestone

Update: This property was sold for £138,000 (6.09% Yield)

Whilst rummaging around looking for my 6%+ deals I noticed this little interesting property just off Canterbury Road.

It's an end-of-terrace 3 bedroom property with two reception rooms which is in very good decorative condition and on the market for £140,000.

Based on a purchase price of £136,000 and a very conservative rent of £700 pcm  you'll be looking at a very respectable 6.18% gross yield. (£725 is achievable, but the former will keep voids down and your return on investment up)

This property was last on the market in 2009 and sold for approx £130,000.  Whilst it is only 0.8 miles from Folkestone's fast train to London (58 minutes), it's unlikely to attract commuters because of the steep hill between the station and Invicta Road, however the area is popular with blue and white collar workers with families who work full or part time.

Ideas to push down voids and increase demand:  

The property lacks carpets in the downstairs areas and is ideal for pet owners in that regard.  Accepting a cat or a small dog could push your yield up to 6.4% (£725 pcm) and enable you to take a 6 week deposit to mitigate any additional risk. 

Although the house is in a very good decorative state, I'd say that the bathroom is the weak spot of the property as a Buy to Let Investment.  The double sink unit is quite an extravagance, however the shower over bath is frankly a bit disappointing. An ideal rental would include both a good bath and an attractive shower.  Good tenants aren't keen on the mixer tap shower and will avoid it where possible.

In addition to this the tongue and groove cladding could encourage leaks and the tiling above looks like it has been there for a while.  If it were my Buy to Let Investment then I would remove the cladding, invest in some new tiling and install an electric shower and glass screen.

Finally I would replace the carpets in the bedroom for something a little more attractive and a little less grey.

If you'd like more information about the Folkestone Market then visit our not so secret website: Folkestone Rental Market Report.

Folkestone is one of the ‘Coolest New UK Areas to Buy a House’

Update:  We've moved our blog to www.folkestone-estateagent.co.uk


Folkestone has been announced one of the forerunners in the Top 10 of the Coolest Places to buy a house in the UK! It was listed with nine other places around the UK on shortlist.com, stating that Folkestone is an up and coming creative place to live by the seaside.

For example plans to redevelop Folkestone’s seafront were approved late last year to build 1,000 new homes, restaurants, shops and sport facilities.  Meaning the location of the old Rotunda Funfair land will now have a use again bringing back tourists and new people to the area, therefore increasing the prices of property and making Folkestone a more desirable place to live.

With quirky pieces of local art work making a fresh vibe in Folkestone such as the numbered pebbles representing the British soldiers who died in the battle of the Somme, to the designed beach huts representing the old golf course which was found on the derelict Rotunda site, Folkestone is a fresh lovely place to live with lots of character.

So, all in all, Folkestone is the place to buy in the South East with property prices looking to soar offering the possibility of great returns in the future for those who buy now!  Here's what shortlist.com they had to say about my favourite UK Property Hotspot

If you don't feel like moving out of London right now but fancy trying your hand at a Buy To Let opportunity then give us a call and we'll talk you through our opinion on the better areas in Folkestone to make a nice combination of yield and capital gain… or if you'd just like to do a little research then download our Folkestone Rental Property Guide.

Here's a link to the full article: Coolest New Areas to Buy a House

BIG Landlord Survey

Update:  The BIG Landlord Survey is now closed, but you can still download the tax guide by following the link!

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Our "Not So Secret" Head Office are currently inviting Landlords across the country to share their opinions in a five minute survey which could net you an iPad Mini, some Amazon Vouchers or a copy of a rather good book called "Why Property Works"

An even more compelling reason to take part is free 15 page guide to "Knowing Your Property Tax Strategy" which you can download at the end.  The guide can help you to save hundreds of pounds on your tax bill as a landlord.

Share your views in The BIG Landlord Survey

Top 10 Agent in the South East Region.. Again!

Phil Spencer talking at The ESTAs…..

Update:  We've moved our blog to www.folkestone-estateagent.co.uk


Today we met Phil Spencer for the third time.  Lovely chap with a dry sense of humour and a real commitment to excellence in the property industry.

Sometimes I've noticed at award ceremonies that the hired celebrity is there only for the money, but each time we go to The Estate & Letting Agency Awards and listen to what he has to say, I get a stronger sense of how much he appreciates the value that a good agent can add… if you'll excuse the pun.

If you're not familiar with The ESTAs, it's the property industry's version of the Oscars, honouring great customer service in Estate Agency and Lettings.  But unlike the Oscars, to get shortlisted in The ESTAs you need to be voted for by your customers