I was asked about these 2 properties below by a landlord and she wanted to know if either would m...
I was asked about these 2 properties below by a landlord and she wanted to know if either would make a good investment. For obvious reasons she is keen to purchase below the £250k threshold to save £5 in stamp duty and is quite flexible about the type of tenants. So I thought I would do some investigation into the figures.
property 1 - Courtesy of sale agent Bourne
It is a 3 bedroom end of terrace in Rowan Close, Bellfields. Over the last 5 years 12 out of the 88 properties on this road have sold, at an average of £189,916.
It is advertised at £250k, it looks like it needs some redecoration so one would have to budget for that in cost and void time after purchase, so offer £240k. Assuming the integrity of the building is fine and one does due diligence on the boiler and electrics, I think one needs to budget £5k-£10k for work plus 2 months void period after purchase (1month might be feasible but best to budget for 2). This would then let to a family for c£1150pcm with a yield of 5.52%.
Alternatively, the floorplan shows it could be let furnished to students / sharers or even on a room by room basis and £1400 could be achieved= 6.72% yield!
The biggest factor to consider on this property is location as it is Bellfields and is about 1.5 miles from the station and town centre, long term this could mean more void periods. However, capital growth needs to be considered too and Rowan Close has seen an increase of 15.48% over the last 5 years.
Below is a well presented 2 Bedroom flat in Onslow Village, just under 1 mile from the station. It is in a block of flats called Wilderness Ct on Wilderness Rd. This block has seen only 6 of the 35 flats change ownership in the last 5 years at an average price of £174,083. Capital growth in the block has been 14.03% over the last 5 years , so slightly behind Rowan Close. The flat would rent out for c£1000pcm yielding just 4.8%.
property 2 - courtesy of sales agent G-Pees
So, the figures suggest 2 things on the face of it
1- Rowan Close is a good investment
2- Perhaps Wilderness Court is overpriced, although there are similar flats in the town at that price.
I would conclude that Wilderness Court is not for an investor as one would also have ground rent and service charges on the leasehold.
However, I would also be nervous to recommend Rowan Close even though the numbers look good- because of the location, unless of course you were prepared to put the work in and let it on a room by room basis to transient tenants.
There is so much to consider when investing, sometimes not just the numbers.
If you want free, no obligation advice of purchasing an investment property in Guildford or the surrounding areas or just want to talk property with us, please call on 01483 537200 or drop in for a coffee to our shop on Woodbridge Rd.