‘Flipping’ Heck - Oxford Property Values Rise by £68.19 a day

Investing in Oxford buy to let property is different from investing in the stock market or depositing your hard-earned cash in the Building Society. When you invest your money in the Building Society, it is considered by many as the safe option. But, the returns you can achieve are awfully low (the best 2-year bond rate from Nationwide is a whopping 0.75% a year!).  An alternative investment is the Stock Market, which can give great returns, but unless you are able or willing to be on the phone every day to your Stockbroker, you will most likely invest in stock market funds - making the investment quite hands off meaning one always has the feeling of not being in control. 

However, with buy to let, things can be more hands on. One of the things many landlords like is the physical nature of property - the fact that you can touch the bricks and mortar. It is this factor that attracts many of Oxford’s landlords – they are making their own decisions, rather than entrusting them to city whizz kids in Canary Wharf playing roulette with their savings.

I always say investing in property is a long-term game. When you invest in the property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, has been strong in recent times in Oxford.  Whilst the value of property does go up as well as down (just like shares do) Oxford has enjoyed consistent year on year increases since 2006.  Rental income is what the tenant pays you - hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your gross yield, or gross annual return. Deducting any mortgage and other costs such as maintenance and/or letting agent fees gives you the net yield.  

Over the last 5 years, an average Oxford property has risen by £124,450 (equivalent to £68.19 a day), taking it to a current average value of £490,800 (based on all properties sold registered in the Land Registry). Gross yields start at around 4% a year, but can reach double digits’ percentages for larger properties that have a licence to be a house of multiple occupation (HMO).

However, something I haven’t spoken of before is the more specialist area of flipping property to make money. (flipping - buying a property, carrying out some minor cosmetics and re selling it quickly).  I have seen several investors recently who have made decent returns from this strategy. For example:

• One Oxford Investor paid £290,000 for a 2 bed apartment on Cheney Lane in January 2015. It appears some cosmetic work was done to the property and it was resold a few months ago (November 2016) for £360,000 a 24.14% return before costs (or compound annual return equivalent of 12.29% AER) http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=42804441&sale=89070732&country=england
• Another Oxford Investor flipped a lovely 3 bed semi on Croft Avenue, Kidlington, paying £330,000 in May 2015 and selling it again after some doing some cosmetic works for £422,500 a few months ago (December 2016) … 28.03% return before costs (or equivalent 16.52% AER) http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=45863565&sale=89071191&country=england

This demonstrates how the Oxford property market has not only provided very strong returns for the average investor over the last five years but how it has permitted a group of motivated and active landlords to become particularly wealthy. 

In my article next week I will introduce the proprietary model I have developed to help landlords and property investors to plan their returns – understanding how to optimise a portfolio for both capital growth and rental yields.