The buy to let sector in Chelmsford, in fact, the whole of the Essex buy to let sector is doing very well at the moment, but it can be a minefield…
I could regale you with many stories where investors have got it wrong in Chelmsford, like some modern apartments in Marconi Plaza in the City centre, selling at the height of the market for top money around £265,000, only to be sold 8 years later at a £24k loss! It is interesting to note that at that time in 2006 for around £242,000 you could have bought a 3 bed semi in Old Moulsham or near the city centre you could have a bought a 4 bed semi for £261,000. A two bed apartment for the similar price as a decent semi, doesn’t in hindsight, quite stack up. Although these stories are few and far between, I still see mistakes being made on a day by day basis in Chelmsford. If you make even a small mistake, it could still prove to be very costly.
So what should you buy in Chelmsford? One option is Houses of Multiple Occupation (HMO’s). While they can be profitable, chiefly in the student market with Anglia Ruskin students, they can make things much more complex and costly, with the need for HMO licence, higher levels of wear and tear etc. If you look back at some of my previous articles listed on ‘The Chelmsford Property Blog’, you will see a lot of interesting facts on which types of properties let well and also, sell well!
Mortgage rates on buy to let are really low at the moment and for the right property and person you can get rates below 3.9% if you put down a decent deposit of 25%, but the best rates are for deposits of 40% deposit and, as I type this, you can get a 5 year fixed rate buy to let mortgage from the Post Office for 3.65%. Also, the deposit will ensure you have plenty of equity in the property, if the property market stagnates in the future. The important thing to remember is the amount you can borrow is driven by the rental income, so it is vital you can identify a property with a decent yield, that lets easily.
Finally though, if are investing so much time and money in building wealth for you and your family, it is equally important for you to identify ways to protect it. Do not forget, if you spend years building a successful property empire in Chelmsford, when you pop your clogs, your family could face an inheritance tax bill of 40 %, which they would have to pay within six months of the death. In a buoyant market, like now, selling in six months is not an issue, but what if the market was like it was in Chelmsford between 2008 and 2012, when things took seasons to sell, not weeks. Quite apart from losing nearly half of the assets you built for your family to the tax man, if they had to sell some of your portfolio, possibly at a discount because the taxman wanted his money so quick, it might be wise to consider some life insurance that will offer protection against inheritance tax.
There are plenty of good advisors in Chelmsford that can help you with the mortgages and life insurance, we would be able to point you in the right direction for this. We can also help you choose the right Chelmsford property to buy. It’s in our interest to do so, because if we offer the best advice and honest opinions, you might consider, although there is no obligation, to trust us to manage your new property.