A couple of local landlords and I had a discussion about the property market in Croydon, when the subject of risk against returns arose.
All landlords are different in the way they play the property game. Some landlords prefer to accept a modest yield/return on their investment for an increased certainty of finding a quality tenant. Other landlords are interested in high returns, with a greater risk with regards to the quality of the tenant. Before you start playing, it is a good idea to have a game plan.
For a low risk investment, you could buy property in the areas of Croydon which are perceived as being more desirable, such as East or South Croydon, where you may be able to achieve an annual yield of around 4-6%. Following my article a few weeks ago, if you don’t mind a slightly higher risk of void periods or a more varied quality of tenant, you are likely to be rewarded with a higher annual yield of 6-7%. This level of risk can be typically taken with Victorian terraced houses around Thornton Heath / West Croydon. If you are after annual yields of 8% and over, you could take more of a risk with houses of multiple occupancy or properties in the poorer areas of town which may attract tenants of a low quality.
If you would like any advice on choosing properties, come and see us at our office or email us.