New build investment opportunities Manchester city area - risky?

[hannah edwards 0]

Hi all,

 

Just joined the property hub after becoming addicted to the ever helpful podcasts!  I'm after some advice or thoughts on buy-to-let properties in the Manchester area.

 

This will be my first investment property and due to current situation will need to be very hands off.  For that reason I've been looking at the mass of new build developments that are cropping up across the city centre and Salford (walking distance to city centre, i.e. Middlewood Locks).    

 

Does anyone have any thoughts on whether the amount of new build developments imposes a risk on both rental opportunities and re-sell later down the line?  I'm looking for a property that has good capital growth potential and reasonable rental yield.  

 

Any advice would be greatly appreciated.

 

Thanks,

Hannah 

 

[mike westwood 5]

Hi Hannah, sorry i cant answer your query but im also interested to hear replies on the exact topic as i live and work in Manchester and i am looking for my first invesment too.

 

thanks,

 

Mike

[ellen tsang 2]

Hi Hannah and Mike,

 

I'm in the same situation as you - first time buyer for investment.

 

Any advice is highly appreciated.

 

Ellen

[james a 17]

I'm no expert on any of this, just my logical opinion.

 

I would have thought that the biggest risks with buying in these new developments is that the ticket price is often artificially high (a bit like when you buy a new car), and you will be competing with a lot of other landlords for tenants when the development is completed.

 

I often notice while looking at price histories that for blocks completed a few years ago people bought for relatively high prices, then sold a few years later at similar or even up to 20% less value. This risk could be avoided if you get a true BMV price, but it would be difficult to get a developer a discount by 20%.

 

The competition for tenants is something that will probably go in time and you could deal with it in the short term by having lower rents, but that would obviously be detrimental to your short term yield.

 

Personally I am looking at higher end, nearly new properties as they have most of the benefits and less of the potential down side.

[DerekT 216]

Hi Hannah

 

Episode 211 from the Robs outline the pros and cons of buying a new build, which provides a good overview of the property type itself.

 

As for Salford/Manchester, I'm with James on this one. You really need to do your research on this due to the number of new ones popping up as developers make the most of the current market there. A quick RightMove search of new homes within 0.5m of Salford Central showed about 6 developments and 88 units (no budget constraints). You may wish to dig a little deeper on:

• Developer/builders - are they reputable, well-known with a history of completed projects that you can visit? This may affect the completion times, finishing/snagging, future re-sale, tenant demand if there's facilities included
• Location - are there any other new builds in the area or ones that will be finished before/after the one you're interested in? Will impact the demand/monthly rent
• Purchase split between owner occupiers/investors - if there's more investors, this will impact on tenant supply/demand if you're competing with other units being completed at the same time
• Price - is the sale price reflective of the current market or has it been inflated to cover things like guaranteed rents? As it's a new build, it may be difficult to compare but if the property is a 2nd/3rd phase of a major build, then you might be able to compare the previous phase's price. You might be able to negotiate towards the end of the developer's accounting year-end if they need to sell off to fund the next build. 
• Comparative properties - given the price you're willing to spend on a new build, what else can you purchase in the area? You may find an even better property that's already been snagged and lived in/rented.

If you're still comfortable with the research and figures, then go for it. Based on the news, it's still a cracking place to invest - Manchester remains a top BTL hotspot. Good luck!

[james a 17]

Something else you need to be careful of is the ground rent and service fees on these developments. They rarely tell you up front how much they are per month and are often high enough to take a significant chunk out of your profit.

[ellen tsang 2]

Thank you all for the advice. I'm also wary of the reputation of the builder. Is there an official website where I can get more information of the builder? Is X1 Development a reputable one?

 

 

[catherine c 0]

Same question as Ellen, I seem to see development from X1 popping up everywhere, would love to hear if anyone have had experience with them!

 

Catherine 

[rcam 0]

Hi everyone

Investor here from Ireland who has a small portfolio in Belfast and London. Keen to invest in Manchester and have been informed about an "Affinity Living" development called Embankment West. Has anyone come across this development / developer and have any thoughts (good or bad)? Many thanks