Last week, I spoke to one of our landlords and he asked me if the number of bedrooms in a property had any relationship to the return he could get. I did some research and followed up his query – I was actually quite surprised with the results...
Currently in Sunderland, the average rent for a one bed property is around £380 per month with an average value of £65,000. This means an approximate Gross Yield of 7.0% per year
The average rent for a two bed property is £475 per month with the average value being £91,950, which gives a Gross Yield of 6.2% per year
The average rent being asked for a three bedroom property in Sunderland is £550 per month but the average value is £124,999, which would give a potential return/yield of 5.3% per year
When I looked at the four bed properties, the Gross Yield changed quite drastically - based on the average sale and rental values, four bed properties would achieve a poor Gross Yield of only 3.9% per year, as average rents are £650 per month but the average value is £200,000
Based on the above figures, on paper it would appear that one bed properties do offer the best return but in general they are harder to let and typically have more void/empty periods than larger properties, due to the sort of tenant that they will attract
It's also worth noting that averages don't always give the true picture as there are always exceptions or bargains to be had that will affect the return and in addition to this you should also consider the potential for capital growth when evaluating investment properties
So clearly the number of bedrooms can affect returns, but it is only one of many factors you should consider before buying an investment property - you should also consider the location, property style, age and size of the property and make sure these all match the sort of properties required by your target tenant market
We would always advise you to seek expert advice before buying an investment property
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