A couple of local landlords and I were discussing the property market in Oxford, 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 Oxford which are perceived as being more desirable, such as Banbury Road, Summertown and Woodstock Road, where you may be able to achieve an annual gross yield of around 4-6%.
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 or 3 storey houses around Oxford, and in particular, Cowley. If you are after annual gross yields of 8% (it can be done!) and over, you could take more of a risk with houses of multiple occupancy or properties in the lower demand areas of town which may attract tenants of a lower quality.
I have landlords that would happily share the pro's and cons on all these fronts.
If you would like any advice on choosing properties, come and see me at our Oxford city centre offices on Woodin's Way, Paradise Street or email me at firstname.lastname@example.org. I will always take your call on 01865 812110.