In over 30 years working in London property I have acquired over 200 investment properties on behalf of clients and none of them have ever lost money and the same goes for my own portfolio.
This may sound like me blowing my own trumpet, but ultimately, the majority of the credit is owed to the long-term stability of the London property market.
London is such a solid economy within the world community that even when the UK may be struggling, as we have been recently, which you would expect to result in a massive crash in property prices, it hasn’t happened in London.
The fact that London is an international city and a desirable place to live underpins the property market in the city and it means whenever prices do go down, they tend to bounce back very quickly.
I would almost go as far as saying London property is bullet proof.
Of course, there are always risks with any investment, but if you buy at the right time in London and hold your property over the medium term, between five to seven years, then it’s quite hard to lose money unless you have made a disastrous purchase.
I have worked with property in other areas of the UK, I started out in Norwich, and while the total returns are similar no matter where you buy in this country, the risk to your investment in London is significantly lower.
Smaller towns and cities across the UK can be much more volatile, if a big employer moves out of a town, then house prices, rents and the property market in general can be seriously affected, but this is not something you have to worry about with London property.
And now in particular seems to be a shrewd time to invest your money in London property.
Since 1984 the population of London has been increasing quickly, coinciding with the improvement of public transport, the environment in London and the culture of the city in general.
We have seen the population in London grow by around a million people since 2015 to today and yet the number of new build development completions is around 20,000-25,000 per year, although that is excluding any local authority housing.
Over seven years that’s around 150,000 new properties and if we take an average of two bedrooms per property, that’s only 300,000 bed spaces for a million people, so supply is low and demand is high.
What will happen is this high demand will push house prices up over the coming years.
And when you consider that interest rates and inflation are expected to come down, now is a good time to use debt to fund your property purchase, as you can probably get a fixed rate mortgage at a lower rate than you could just 3-6 months ago.
As such you wouldn’t mind paying a little bit more for your property now, as you would expect that over the medium term when interest rates do come down your affordability will improve.
It comes down to the old adage of buying the rumour not the news.
Right now is the rumour so it is a good time to get in, because when interest rates do actually come down, everyone else will follow.
Timing is one part of it, but the other aspect to consider is finding the right property at the right price and that’s where we come in at Rocket.
We allow investors to be completely hands off. They tell us how much they want to invest and then we produce the numbers, give them a full breakdown of what they are going to buy, why they are going to buy it, how much it will cost and how much cash they need.
From there, we’ll explain what needs to be done to the property, make sure it complies with all the necessary regulations, arrange the builder and refurbishment.
Then we’ll let and manage it and we can even help arrange the sale process when it comes to that down the line.
One of the concerns for investors in London property is the yield, as expectations are that landlords will only see a 2-5% income return and so they’ll take their money elsewhere, but that’s not the case.
Here at Rocket we have a product that can get you 7.5% / 8% income and sometimes even 9% yield before tax.
With rents having gone up, we have found a particular niche in the market where we can buy properties, add value and we’ve let 50 + so far showing in the order of an 8% yield.
A recent property we dealt with, we bought it for an investor at £470,000, spent £66,000 on it and we’re letting it for £3750 a month, so the gross yield is 8.4% allowing for the refurbishment or 9.6% based on just the purchase price.
Then when you factor in the costs, with their gross income being £45,000 and after fees, repairs, setup for the inventory, they receive £37,000, which is a 7.9% net yield before tax based on the purchase price.
This can be done and we have proven time and time again that London property is an excellent place to invest your money, especially if you are working with a competent agent, and in that regard look no further than Rocket.
