Last week, a couple from the Writtle area came in to discuss potentially investing in property for Buy to Let in Chelmsford. One of the most important considerations you will make before investing is the balance between annual return/yield and the annual value increase/capital growth.
Mildmay Road on the Old Moulsham side of Chelmsford, is in one of the most sought after areas in the City. The average three bedroom house currently house sells at around £297,000 and rents are roughly £1150 – £1200 per calendar month.
With this in mind, it was a surprise to find that similar sized three bedroom houses on Avon Road, off Chignall Road in Chelmsford, have outperformed those on Mildmay Road. This is because a three bedroom house on Avon Road can be bought for around £206,000 and the achievable rents can be around £1000 – £1050 per calendar month.
The yield which could be achieved from property on Avon Road is around 4.8% per year. When we compare this to the possible 3.8% on Mildmay Road, it is nearly 29% higher on Avon Road. However, we must remember that yield is not the sole consideration when investing in Buy to Let properties. The average value of a three bedroom house on Avon Road in 2004 was £192,000, which has since risen by only 8% in the last 10 years. A three bedroom house on Mildmay Road in 2004 was approximately £219,000, meaning the value has increased by an impressive 35% in the same 10 years.
This goes to show how important weighing up capital growth is compared to annual yield is when you are looking at investing in a buy to let property
If you would like more information on investing in Chelmsford’s property market, please call me on 01245 330500 or visit our office on Duke Street