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The power of the commuter towns


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To me, it seems clear that unless one disposes of substantial amounts of cash, London is becoming more and more distant as a viable financial investment for many of us. ROI's and yield values are not great compared to other places in the UK, prices are increasing by the second, and making good deals seems impossible (competitions is fierce!!). But hey, you can argue that London will always have a high demand..a very strong point if every month you have to pay your lender!

 

The amount of people wanting to live in the UK is increasing and London is like a flame to a moth for most of them. On top of that, with the law of supply and demand, if we are not building enough then whats available is of course going to be more expensive to buy!

 

Can we see a solution to this problem? My answer, as Im sure Rob&Rob would agree, is to start investing in commuter towns. Although one could argue that this could be a temporary solution to the problems we are facing now with high demand around London, could commuter towns maintain a good value in the years to come? Imagine if foreign investors got heavily taxed for buying property in the UK, would commuter towns still be as interesting as they are now? 

 

For example, I am currently looking at Woking (Surrey). I know this area pretty well as I commute from London every day for my job (I know, I like to be different!) and with only 30min by train from Waterloo, it is a very nice place to invest in my opinion. But Im taking my time and looking around at all the commuter towns that provide interesting yield numbers. 

 

Would be great to have views from other investors who are facing the same dilemma as I am. In the meantime take a look at this link I have found. Many more around I guess, but I find this pretty useful.

 

http://www.commuterguide.co.uk/

 

cheers

@cesto23

 

 

@cesto23

Design Engineer, BSc MSc

London

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Thank you for sharing the Commuter Guide link! I smell a future Resource of the Week...

 

As we've talked about on the podcast before, there's a definite ripple effect from the nonsense of prime central London out to the commuter belt and beyond. But if London does fall back as foreign investors pull their money out, I can't see commuter towns being adversely affected - demand in the South East is too strong in general. There will always be millions of people who need to work in London but want a garden for their kids.

 

It will be interesting to see your findings from looking into the investment case for different commuter towns. In the meantime, enjoy the empty trains you must get on your reverse-commute!

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Cesto, I live near Woking (use West Byfleet station to commute).  I agree with your thesis and we did exactly the same looking around as you. 

 

Ultimately I settled on Guildford as it has a hospital and university as well as good transport links, schools and industry.  We also bought in Reading for similar reasons.  Woking put me off as the centre is a bit tired whereas the others are far nicer destinations in themselves.  Another place you might look at is Farnborough / Aldershot / Camberley (no uni but prices a bit less than Guildford and has M3, fast trains, industry, schools and hospital).  We looked there too but deals came up sooner in Guildford and Reading and we ran out of money otherwise would have invested there too.  Our London based broker thinks we have amazing yields though go further out from London and they get better still.  We were after a yield that wasn't going to be inadequate if interest rates zoom up are not after an income for another 15+ years and the balance seemed right.  Other places I thought might be interesting included Ascot, Windsor, Bracknell and further either way around the M25.  The figures seemed to stack up similarly.

 

One thing I would note though is that getting deals is still hard and there is still lots of competition - in Jan/Feb when we were looking several places I bid on went on day 1 after twenty people saw them for about 10% more than the asking price so it is still rather silly.  I think building relationships with agents is vital as they will save you time by highlighting the motivated sellers.  Good luck.

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Thank you for sharing the Commuter Guide link! I smell a future Resource of the Week...

 

As we've talked about on the podcast before, there's a definite ripple effect from the nonsense of prime central London out to the commuter belt and beyond. But if London does fall back as foreign investors pull their money out, I can't see commuter towns being adversely affected - demand in the South East is too strong in general. There will always be millions of people who need to work in London but want a garden for their kids.

 

It will be interesting to see your findings from looking into the investment case for different commuter towns. In the meantime, enjoy the empty trains you must get on your reverse-commute!

 

 

Thanks Rob! commuterguide.co.uk is a really well put together website, Im sure lots of people would benefit from it. 

 

Its very true about the South East, always popular and hopefully always will! It is very tempting to hang on a little while longer to save up for a better place in London, but in a way I feel like Im missing out on opportunities on commuter towns. It is a difficult one! 

 

However, I have some clear goals and objectives set and the thorough research that Im doing now will hopefully pay off. The plan is to visit a different area around London every week end and view a few properties each time. I feel like this is the perfect plan for me because it will give me and my girlfriend a chance to travel a bit (which we never do) and see what else is out there. Perhaps I will share my experiences and opinions with you guys! Let's see how I get on...

 

ciao

@cesto23

Design Engineer, BSc MSc

London

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Has anyone in the Hub started investing close to any proposed HS2 stations?

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Cesto, I live near Woking (use West Byfleet station to commute).  I agree with your thesis and we did exactly the same looking around as you. 

 

Ultimately I settled on Guildford as it has a hospital and university as well as good transport links, schools and industry.  We also bought in Reading for similar reasons.  Woking put me off as the centre is a bit tired whereas the others are far nicer destinations in themselves.  Another place you might look at is Farnborough / Aldershot / Camberley (no uni but prices a bit less than Guildford and has M3, fast trains, industry, schools and hospital).  We looked there too but deals came up sooner in Guildford and Reading and we ran out of money otherwise would have invested there too.  Our London based broker thinks we have amazing yields though go further out from London and they get better still.  We were after a yield that wasn't going to be inadequate if interest rates zoom up are not after an income for another 15+ years and the balance seemed right.  Other places I thought might be interesting included Ascot, Windsor, Bracknell and further either way around the M25.  The figures seemed to stack up similarly.

 

One thing I would note though is that getting deals is still hard and there is still lots of competition - in Jan/Feb when we were looking several places I bid on went on day 1 after twenty people saw them for about 10% more than the asking price so it is still rather silly.  I think building relationships with agents is vital as they will save you time by highlighting the motivated sellers.  Good luck.

 

Hi Andrew,

 

thanks for your reply. Ah I know West Byfleet very well as I lived there for a while! Lovely place and well connected to London. You have given me a great list of towns, I have read a bit about them and they all seem to offer pretty good returns. Im excited about this part of the investment and its good to take time to have a look around. 

 

The silliness of the market right now is just out of control. I was talking to a friend (who finally managed to buy his first property) and the competition he had to face when attempting to make an offer on the properties he liked was just ridiculous. He bought in Surbiton, and he did tell me that it was madness during the viewings and prices sky rocketing because of the many offers very quickly piling up. Must be great for whoever is selling now....

 

I agree about Woking..town centre is not the best, but its fast commute to London makes it in my view a good place to invest. Lets see if I change my mind after visiting other places!

 

cheers 

@cesto23

Design Engineer, BSc MSc

London

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  • 2 weeks later...

I dont know if you are, but I am currently struggling to get good gross yield values. I went for a property viewing today in Wimbledon and everything looked great..untill I put the numbers in my excel sheet and I was amazed that so far what Ive found doesn't give higher than 2,5% gross yield and a ROI of 6%. 

 

I am curious to see if the Telegraph is right about gross yileds..lots of places to go and explore!

 

http://www.telegraph.co.uk/finance/personalfinance/investing/10257398/Cities-offering-the-biggest-returns-to-landlords.html

@cesto23

Design Engineer, BSc MSc

London

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