Last
week, a nice couple who owned a property in the East Shore Village
development in Seaham came in to discuss potentially investing in a similar property as a Buy
to Let
As
I discussed with them, one of the most important considerations you will make
before investing is the balance between annual return/yield and the annual
value increase/capital growth
East
Shore Village was built on the old Vane Tempest colliery site from 2005 onwards and is
a mix of around 600 Yuill and Miller Homes and a smaller number of impressive
detached self-build homes. It is one of the most sought after places to live in
Seaham
The
average sale price of a typical three bedroom semi-detached house on Alnmouth
Way, East Shore Village is £138,916 and rents for this type of property are on average £595 per calendar
month
With
this in mind, it was a surprise to find that similar sized three bedroom
semi-detached houses in the ex-council Parkside area have massively outperformed those on East Shore Village
This
is because a three bedroom semi-detached house on a typical Parkside street
such as Parkside Crescent can be bought for around £58,500 and the average
rents on that street is currently £425 per calendar month
The Gross Yield which
could be achieved from property on Parkside Crescent is around 8.7% per year.
When we compare this to the possible 5.1% on Alnmouth Way, it is 70% higher on
Parkside Crescent
However,
we must remember that yield is not the sole consideration when investing in Buy
to Let properties and that capital growth is equally important
The
average value of a three bedroom semi-detached house on Parkside Crescent in
2005 was £77,316
meaning homes there are worth nearly £19,000 less today than they were in 2005.
The average price of a brand new three
bedroom semi on Alnmouth Way was £125,912 in 2005, meaning rather than suffering
a heavy loss, their value has increased by 10% in the same period
If you would like more information on investing in the Seaham or Sunderland property market, please call me on 0191 567 8577 or drop me an email to neil.whitfield@belvoirlettings.com
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