I was chatting to one of our landlords yesterday about the current lettings market and the conversation turned to his particular situation as he owns rental properties in both Sunderland and Seaham.
I’m conscious that we’ve mainly focussed on Sunderland for our previous articles and investment advice and with this in mind thought it would be worth looking at investment opportunities in the Seaham area (SR7 postcode), as we do manage a large number of properties in Seaham.
As we’ve discussed before, many investors prefer to buy what they know or where they know, so for some Seaham & surrounding areas may be rejected simply due to fear of the unknown.
It’s fair to say that some areas in the SR7 postcode would tend to attract only non-working tenants and we would rarely advocate landlords renting to this market unless they are particular experienced in dealing with the complexities of this market.
You should seek our expert advice if considering a purchase in SR7 as whilst there are areas that we would advise you to avoid there are still many properties that stack up as good investments and will attract working tenants if you know where to look.
The majority of sales in Seaham during the last year were terraced properties, with an average sale price of just over £82,000. The average sale price for a 2 bedroom terrace was just over £70,000 and the average rent for a 2 bed terrace that would appeal to a Good Tenant is around £425pcm. This would deliver a healthy 7.2% Gross Yield.
There are bargains to be had with 2 bedroom terraced properties in the Seaham area starting as low as £25k but caution should be exercised as even following full refurbishment the location may dictate whether or not a working tenant could be sought.
As a rule we tend to advise that 3 bedrooms are better than 2 and semi-detached houses are better than terraced - this certainly applies in Seaham so an ‘ideal investment’ 3 bedroom ex-council semi in the Westlea area of Seaham will cost around £85,000 and will deliver £475pcm in rent – giving a reasonable 6.7% Gross Yield
Some landlords prefer to knowingly lose out on Yield but rent out ‘better’ properties that they would be happy to live in themselves – for this landlord the modern East Shore Village development in Seaham represents a popular choice for professional tenants
The average sale price for a 3 bedroom semi-detached house on East Shore Village is around £150,000 and with average rents of around £550 - £650 they will deliver between 4.4% and 5.2%. It’s worth noting that the buoyant sales market on East Shore Village means investors may be able to enjoy decent capital growth to offset the loss in Yield.