Wednesday, 21 May 2014

Investors Guide to Sunderland - SR3

I must admit to being quite pleased to have got the SR1 and SR2 guides out of the way, as they needed covering off but they aren’t really the areas that we would focus on for delivering great investments – things start getting more lucrative (and therefore more interesting!) when you look at the SR3, SR4 and SR5 postcodes

SR3 covers a wide range of areas & property types from the exclusive detached properties in Warden Law Lane (average transaction value £423,673) to Somerset Street in Silksworth (average transaction value £64,636), just over a mile away

From a rental point of view, we tend to advise that it often makes sense to avoid either extreme, looking for properties that will attract the large number of working tenants (be they single people, couples or families) rather than pitching for non-working tenants on the one hand or the small number of highly demanding executive tenants willing to rent the more expensive properties on the other

The SR3 area has a number of different ways to cater for this hardworking tenant ‘core market’

For first time renters, be they single people or couples SR3 has a number of leasehold properties (flats) that represent much better value than similar sized properties in or around the City Centre

Flats in Farringdon (such as the 1950’s built Carlisle House on Ashford Road & Aydon House on Aberdare Road) near to the Farringdon Academy are always popular, not only with first time renters but also older tenants looking to downsize

We manage a number of properties in blocks in this area and they will return 7.8 % Gross Yield based on an average purchase price of £60,000 - £65,000 and an achievable monthly rent of £425pcm – we’ve recently posted a couple of bargain properties to the blog offering even better returns so it’s worth keeping a close eye on the market to snap up a bargain

Even closer to the major employers in Doxford International Business Park (such as Barclays, EDF Energy & MoreThan) are the 1970’s built flats in Moorside and nearby Chapel Garth – again we manage several and they are rarely empty, with a steady supply of good, working tenants looking to live close to work or because of the good access to the rest of the region via the A19

These flats can come with a garage (in separate blocks) and the ground floor flats have decent private rear gardens - beyond that it’s worth checking whether or not the original electric heating has been upgraded to gas central heating, as this will always increase tenant appeal

A typical Moorside Flat will return 6.75% Gross Yield based on an average price of around £80,000 and £450pcm rent

There are also flats in the Lakeside Village developments which will rent well (however most are owner occupied with older residents who have purchased in the 80’s through the Right to Buy scheme) so it is worth keeping an eye on any that do come onto the market as they may be sold with vacant possession & in need of a speedy sale

For families with children the SR3 postcode offers a number of areas with properties that will be both appealing to tenants and will provide decent returns for landlords

Most of the properties which will make good investments if looking to appeal to a family are ex-council, offering a decent amount of internal space & also the good size gardens that families prefer

Just as the flats in Farringdon are appealing to both tenants and investors alike, we would advise investors to look at houses in Farringdon – either a 2 bedroom semi-detached or ideally a  3 bedroom semi (3 bedrooms would be better than 2 as they are in shorter supply & therefore will be more sought after, not only that they will automatically suffer less ‘churn’ given the tenants are less likely to outgrow the property)

A typical 2 bedroom, ex-council semi such as the one on Aberdare Road from our recent blog post is £77,500 and will return 7.0% Gross Yield based on a conservative £450pcm, a typical 3 bedroom ex-council semi will cost £90,000 and return 7.4% based on a slightly higher £495pcm rent

In addition to Farringdon, similar ex-council properties can be found in the nearby Plains Farm and Thorney Close estates, however we would advise obtaining expert local advice before proceeding as whilst is it possible to pick up a great investment, these areas do have a higher proportion of non-working tenants in some streets so where you buy is paramount

That’s not to say these areas should be avoided outright - we’ve just let a 3 bedroom semi in Plains Farm (in under a week) for one of our landlords who bought it as an investment following our advice – he paid just under £85,000 and based on the £525pcm rent will return him a healthy 7.4% Gross Yield

The above example proves there’s clearly good investments to be had in the SR3 postcode but as always we recommend taking expert impartial advice before making any purchase

Please call on 0191 567 8577 or email for objective & impartial advice on all aspects of property investment in Sunderland

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