Your typical investment packages focus on the South Wales Valleys, could you tell us a bit about that area and why it works so well for your investors?
We focus on the South Wales Valleys as they represent a safer, lower entry point to the market. Lower purchase prices compared with neighbouring cities and in fact much of the UK, allows investors to diversify funds across several properties and/or strategies.
The area has a broad demographic allowing options for many different target audiences when it comes to rental or resale properties. When chosen correctly these valley towns still have great commutable links with bigger cities and the UKs major transport routes via the motorway network and rail services. The valleys have a great sense of community and people who are born and raised there generally are happy to continue to live there, to be close to families, to enjoy the lower cost of living and some of the most beautiful scenery, tourism hotspots and outdoor activities not to be found just anywhere in the UK.
Why else do we focus on the Valleys? Because we live there, work there and invest there ourselves, this gives us the edge when it comes to really knowing the areas so that we can best advise any of our clients and potentially keep them as safe as is reasonably possible from make the wrong investment decisions based on geography alone and the lack of awareness of certain micro markets.
What typical return can an investor expect to see?
Whilst it is true that capital appreciation maybe smaller in pounds and pence, the area has generally still enjoyed a 20% increase over the past 5 years.
Where the market is really strong right now is in the rental market and the returns that this can offer. Around 8% is the minimum 'Norm" for any investment in our area when it comes to rental yield, but it is not uncommon to see double digit returns. As is the case with many other areas of the UK other returns are based on the client's own criteria but again a minimum of 25% ROCE is what we use as a benchmark and indication of a 'good deal'.
I can't stress enough the importance of knowing the area or using a service like ours that does. Research and due diligence is key to understanding the local market, just because a comparable property may seem a lot cheaper than one a few streets away it is not necessarily the best choice for investment.