Looking to Invest in the Inverness Rental Market?
We're often asked by would-be investors what sort of property they should buy and which areas of Inverness are best. Here are a few of our thoughts.
One bedroomed flats are usually snapped up quickly and two bedrooms, which suit couples starting a family or tenants hoping to have friends to stay occasionally, are also popular. Yields are higher too on smaller properties so, if finances will allow, it's better to invest in a couple of smaller units rather than one larger one. For example a one-bedroomed flat valued at about £100k should rent at about £500 per month whereas a 4 bedroomed house costing £300k may achieve £1000 - £1100.
So which parts of Inverness are the hot spots and what should investors avoid? Currently tenant demand is strong and future prospects for the Highland capital are looking good, with UHI Inverness Campus established and strong life-sciences and renewables sectors. Our experience is that smaller properties on the periphery of the city in developments such as Culduthel Mains, Cradlehall and Inshes tend to find tenants quickly. Equally, 1-2 bed properties within walking distance of the city centre are in demand.
However, prudent investors should have an eye on the "what if" factor: How would the market be if there were a downturn?
The peripheral estates comprise a high proportion of rented properties and, if times were to change and a slump to occur, these are would be competing with each other for tenants with an inevitable downward pressure on rents. It's not difficult to imagine a downward spiral of reduced rents, less responsible tenants and consequent management difficulties. It could be difficult too, in such a scenario, to sell if you wanted to pull out. Older properties in areas with more mixed tenure such as the Crown and the areas around Kenneth Street will be more resiliant to any downturn. Would-be landlords need to balance those prospects however with an assessment of likely repair and maintenance costs which will be higher on older properties.
It's also worth considering the presence or otherwise of a garden. On balance, these are problematic unless landlords are willing to engage a gardener, as tenants increasingly don't have the time or even the inclination to get stuck in to grass cutting and weeding. Current lifestyles seem to favour communal green space outside the front door which someone else looks after. We're also noticing an increasing wish for secure (preferably not communal) cycle storage - a feature which, along with pram storage, is notably lacking in many new developments.
Lastly, a word about condition and presentation: All of the above assumes properties to be attractive, safe and fully fit for purpose. The days are gone when financially strained tenants were grateful just to have a roof over their head thanks to a landlord's benevolence. 2018 tenants in Inverness are discerning, often professional and reasonably affluent, and want a place they feel happy to call home, can take pride in and invite visitors to. Many Simply Let tenants are young professionals who don't want to buy, but do want good quality well maintained accommodation. Landlords who recognise that and gear up to it will minimise void periods (the most expensive times) and find that their tenants stay longer.
At the end of the day your choice about what to buy and where comes down to a mixture of shrewd judgement and best guessing future trends. We hope that awareness of the above might help to focus your thinking.
If you'd like to chat to us about your plans please just get in touch.