A couple of local landlords and I had a discussion about the property market in Andover, when the subject of risk against returns arose.
All landlords are different in the way they play the property game. Some landlords prefer to accept a modest yield/return on their investment for an increased certainty of finding a quality tenant. Other landlords are interested in higher returns, with a greater risk with regards to the quality of the tenant. Before you start playing, it is a good idea to have a game plan.
For a low risk investment, you could buy property in the areas of Andover which are perceived as being more desirable, such as Burghclere Down and Saxon Fields (click here to read about some great bargains on Burghclere Down), where you may be able to achieve an annual yield of around 5-6%. Following my article afew weeks ago, if you don’t mind a slightly higher risk of void periods or a more varied quality of tenant, you are likely to be rewarded with a higher annual yield of 6.5-7%. This level of risk can be typically taken with ex local authority 3 bed houses around Andover such as King Arthurs Way. If you are after annual yields of 8% and over, you could take more of a risk with houses of multiple occupancy but beware of this strategy as there are rules and regulations to be followed with those and inevitably they attract more maintenance costs.
If you would like any advice on choosing properties, come and see us at our office or email us.