Buy-to-Let investment advice & comparison of 2 bed semi detached houses in Hylton Redhouse and Seaburn, Sunderland for Gross Yield and Capital Growth potential.
A landlord contacted us this week to get advice on the rental market in the north of Sunderland, as she had been advised that there are fewer private rented properties in the north than in the south of the City, so it may be worth looking into for an investment purchase.
Whilst it is true that there may be more owner-occupied properties north of the river than in the south, there is very a large variation in not only property types & styles but also large differences in the potential tenants in the areas covered by the SR5 and SR6 postcodes.
We have consistently advised investors that 2 & 3 bedroom semi detached properties in north Sunderland areas such as Hytlon Redhouse and Town End Farm can make good rental returns but I thought it worth comparing this with one of the more aspirational areas north of the river such as Seaburn.
Looking at a typical 2 bedroom semi in Riddings Road, Redhouse (an area we know well as we manage properties here) the average sale price in that street is £76,135 and the average rent is between £450 and £475pcm, giving a gross yield of 7.09% based on the lower amount. We compared this to a 2 bedroom semi in Lundedale Avenue, Seaburn where the average sale price is £137,850. Even with considerably higher average rent (£550 - 595pcm is achievable) the Lundedale Avenue property only returns at most 5.19% gross yield.
Clearly yield is not the only factor and the potential for capital growth should also be considered. Anecdotally you would expect the more sought-after areas to perform better on this measure but it is interesting to note that sale prices in Riddings Road are down 9.69% on the 2008 peak, compared to a drop of 8.3% compared to 2008 for Lunedale Avenue. This suggests that when the sales market does pick up prices will rally in both areas but Seaburn may not outperform Redhouse as may have been expected.