Hopkins Homes' Guide To Property Investment
If you’re looking for quality investment properties in Norfolk with potential rental yields of up to 6.86%, this guide is a must-read. Our one and two-bedroom investment apartments at Kingsfleet in Thetford could be the perfect choice.
Located in a beautiful rural environment with a host of local amenities, and with nearby military bases swelling the ranks of potential tenants, choosing one of our new build investment apartments could be a savvy move for both new and experienced landlords.
Let’s dive into the investment process and unpack what’s involved…
Start With One Property and Grow Your Portfolio
As any financial advisor will tell you, the amount of money you’re willing to put into an investment property will be determined by your attitude to risk.
In this context, new build investment apartments such as our properties at Kingsfleet in Thetford, are a relatively safe option, especially if you put down a 25% deposit and secure an interest-only buy-to-let mortgage for the balance.
If your property value, rents, and earnings only go up in line with inflation – with mortgage interest covered by the rental payments – then your monthly profit and capital growth could be significant over a 25-year mortgage term.
So even with upfront costs such as stamp duty and legal fees, you can start your investment adventure with one or two properties, then increase this over time by leveraging growing property values and rental earnings across the whole portfolio.
What Are Rental Yields?
A rental yield is the annual rent you receive from your buy-to-let property, expressed as a percentage.
The average rental yield on investment properties across the UK is 5-8%, with anything above 6% being an excellent return.
As mentioned, our new build investment apartments at Kingsfleet, Thetford offer a strong rental yield of up to 6.86%.
It’s straightforward to calculate your gross rental yield before expenses:
- Multiply your monthly rental by 12 to work out your annual income
- Divide your annual income by the property purchase price (or current value)
- Multiply this by 100 to get your percentage gross rental yield
Many factors come into play when calculating your potential rental yield, including expenses such as mortgage payments, insurance, property maintenance, and tax.
You also have to consider the location-specific capital growth potential of the property you’re thinking of buying, plus the current and future rents achievable locally.
If the figures add up, as they do for our Kingsfleet Thetford apartments, then it’s game on.
Is Your New Property Purely an Investment?
The terms of a buy-to-let mortgage mean you can’t live in your property on a residential basis, and with a repayment mortgage you’ll need to inform your mortgage company if you intend to rent it out.
So, if you ever imagine yourself living in your new investment property after renting it for a while, you’ll need to work out your short and long-term life goals, and where you see yourself living and working in the future.
With such big decisions to make, we always recommend getting independent mortgage and financial advice and employing a reputable local solicitor to guide you through your purchase.
If you choose to invest in one of our investment properties at Kingsfleet in Thetford, our team can put you in touch with all the professionals you need to make the process seamless.
Identify the Type of Property You Want to Invest in
What makes the better investment opportunity, a house or a flat? Let’s consider both options.
New Build Investment Apartments
Due to the additional maintenance costs associated with a larger property, plus the higher rental yield available from flats, it’s widely viewed that one and two-bedroom apartments make the best choice from a purely investment perspective.
Our Thetford apartments come with five years of service charge paid upfront, making an investment with us even more attractive.
New Build Investment Houses
While houses are an excellent investment as a family home, such as our range of three and four-bedroom properties at Kingsfleet in Thetford, they are usually less popular as investments due to the increased maintenance costs and potentially lower rental yields.
However, with its high number of US and UK army and RAF families serving on nearby bases, Thetford in Norfolk is a special case when it comes to renting larger properties.
With many military rents paid by the US government, investing in a family home could be a good option.
Run the Numbers Before Investing
Based on our explanation of rental yield above, let’s look at an example of how to run the numbers on one-bedroom investment apartments:
Gross Yield
- Purchase price = £185,000
- Monthly rent = £1000 or £12,000 (based on full occupancy)
- Gross rental yield = 6.49% (£12,000 divided by £185,000 x 100)
Net Yield
Taking into account some of those expenses mentioned before, let’s work out the net yield based on the same example:
- Mortgage payments = £2,200 p.a
- Buildings Insurance = £200 p.a
- Maintenance = £240 p.a
- Service Charge = £809.04 pa
- Estate Charge = £218 pa
This gives us a net rental yield of 4.5% (£12,000 minus £3,667.04 divided by £185,000 x 100)
These figures are illustrative only, but give you an idea of how to work out your possible return on investment.
Do You Need a Mortgage?
If you’ve got a lump sum from savings, inheritance, or the sale of another property, then you may not need a mortgage at all to fund your investment property.
But why risk all your own money?
As discussed, a better option would be to put down a deposit of 25% for example, then take out an interest-only buy-to-let mortgage.
This way you’re mainly using other people’s money to fund your purchase and facilitate your rental income, and capital growth potential.
What About Your Deposit?
Buy-to-let mortgages usually require a deposit of 20-40%, with at least 25% required for new build properties and flats, such as our one and two-bedroom Thetford apartments.
While this is typically higher than residential deposits, this still leaves plenty of room for excellent rental yields as outlined in the figures above.
Lenders treat each case on an individual basis, so your personal financial circumstances will determine the exact amount of deposit required.
Location, Location, Location
With its historic town centre, beautiful rural views, and picturesque Little Ouse River – plus a range of local amenities that make larger towns blush – Thetford is a lovely place to live and work.
Did we also mention the hundreds of army and RAF personnel serving on nearby military bases, the quality of life, the great local schools, health facilities, and multiple green spaces?
In short, there are many benefits to owning an investment property in such a fantastic location, not least the capital growth potential, high rental yields, large tenant pool, and the high standard of properties to rent out.
Does Your Investment Property Need to Be Nearby?
Whether you live near your rental property or not is really a personal decision. There are pros and cons to both.
Live nearby and you can be on hand to manage the property yourself, which means you won’t have to pay a management company their 20% fee.
However, being just down the road can mean the odd unwanted phone call late at night from your tenants – or an urgent issue that needs dealing with.
Either scenario shouldn’t be a problem though, if you set your boundaries, know your numbers, and run a tight ship.
Different Areas Offer Different Rental Yields
Rental yields vary wildly across the UK for many of the reasons outlined in this guide.
Yet while certain cities and regions frequently top the best buy-to-let investment tables, you also have to account for variations within areas themselves.
Thetford in Norfolk is a good example. The rental yields available on our investment properties in the town are boosted by a diverse number of factors specific to the area – which will always make our Thetford apartments a sound addition to your portfolio.
New Build Investment Properties Vs Resale Houses
Although we’ve mentioned that deposits on new build investment apartments are sometimes higher than on residential properties, this is usually far outweighed by the downsides of buying a resale property for investment.
Here are some of the benefits of choosing a new build:
- Lower maintenance costs
- Better energy efficiency
- Advanced safety features
- Potentially higher rental yields
- Higher capital growth potential
- High-speed broadband
- Better local amenities and transport links
- 10-year NHBC Buildmark guarantee
- Countless property designs to choose from
New Builds Are Ready to Go – No Renovation Work Required
With all the superb options mentioned above, our quality investment apartments are ready to go right now, without the need to compromise on style, materials, and local amenities.
Best of all you won’t need to pay extra for any expensive renovation work required on a resale or older property.
Talk to Us About Our Thetford Investment Apartments
Our expert property team is standing by to discuss our Thetford apartments investment properties.
We can support you on all aspects of your purchase, and put you in touch with our recommended legal and financial professionals to help streamline the whole process.
To contact us about starting or growing your property investment business, email us for a brochure at sales@hopkinshomes.co.uk or complete our contact form to get in touch.
Conclusion: Are You Ready To Grow Your Property Investment Portfolio?
Buying investment properties can be daunting, whether you’re an existing landlord or are just starting out with your portfolio.
However, we hope this property investment guide has answered many of your questions, and given you some pointers so you can make an informed decision on your next purchase.
Kingsfleet Offers Highly Attractive Rental Yields
With strong rental yields of up to 6.86%, our Thetford apartments at Kingsfleet represent the gold standard when it comes to investment properties not just in Norfolk but across the entire UK.
We hope you’ll agree they would make a great addition to your portfolio and we look forward to discussing your options with you.
This article is provided for general information purposes only and does not claim to be or constitute legal or other professional advice. Any figures quoted are for illustrative purposes only.