Hull is on the up, and there’s a real building boom going on. There are new apartment developments springing up all over the city, and at CJ Property, we’re currently marketing some fantastic luxury apartments at Essex House.
For buy to let investors, there are some fantastic opportunities to generate real returns from purpose built apartment blocks – but there are also real risks. Big gross yields might look attractive, but they can soon be diminished when you factor in all the additional costs associated with leasehold apartments.
In this post, we provide our 4 top tips when purchasing buy to let apartments in Hull (or anywhere).
1. Know your costs
Before you purchase any apartment, it’s important that you’re clear on all the fees you’ll have to pay.
Typically, these include:
- Ground rent
- Service charges
- Parking charges
These fees can run to thousands of pounds each year, so factor them into your costs when working out the rental yield. It’s also important to remember that these costs are likely to increase over time, which could have a real impact on your returns in the future.
2. Check for hidden fees
If you’re buying the property leasehold – then you may be charged a sub-letting fee by the freeholder/management company. In practice, this usually takes the form of a small (£25-£100) fee every time the property is let to new tenants.
It might not sound like a huge amount, but if you’re changing tenants every 6 months, it can soon add up, and have a real impact on your rental returns.
Depending on the building, you may also have to pay a small yearly fee to access the communal aerial or satellite dish. Before investing in any property, have your solicitor check the terms of the lease – and if there are hidden fees, factor these into your calculations.
3. Inspect the building and communal areas
Now you know how much you’re paying in fees, you want to know exactly where they are going! Have a thorough look around the communal areas of the building before you commit to a purchase. Examine the levels of wear, how clean it is, and whether the building is being looked after by the tenants.
You want to see examples of active management from the company – notes to tenants reminding them of their obligations, evidence of regular cleaning, tidy corridors, working lifts.
If it’s dusty, damp, deserted or cluttered – it’s a major warning sign! Not only could this be evidence of a service charge shortfall, but it could also have an impact on the types of tenant you’re able to attract and keep. If rules aren’t being enforced, then your tenants are more likely to have problems – and a tenant’s problem is a landlord’s problem.
4. Examine the accounts
Before you buy, ensure you see the latest copy of the building accounts from the management company, and a copy of the AGM. This will show you how much money is coming in from the fees, and what it’s being used for, and whether there are any major problems.
The accounts will give you a good picture of how well the building is being managed, and how active they are with maintenance, cleaning and repairs. It will also give you a good idea over the financial health of the block as a whole.
You want to ensure that there is enough money in the pot to cover for any major repairs – otherwise your service charge is likely to increase to cover the shortfall, or the property will dilapidate and impact on the value of your investment.
Investing in Hull apartments from CJ Property
Despite the risks, apartments in Hull can make fantastic investments – as long as you get the right properties.
Whether you want to maximise yields, or build a portfolio for long term growth – the right local agent will ensure you make the right decisions. At CJ Property, our buy to let investment specialists are here to help you acquire the right buy to let apartments in Hull, at the right price.
With vast knowledge and unrivalled experience in the local market, we’re here to help you at every step of your investment journey. From finding desirable apartments in the right areas, to looking after your portfolio and managing it on your behalf – we’ll help you to achieve your property investment goals.
Ready to start your investment journey? Book your free, no obligation consultation with CJ Property – the Hull buy to let investment specialists. Call 01482 645270 today for further information.