Wednesday, 8 October 2014

Increase Yield by Spending More?

With house prices in Sunderland starting to see a gradual upward trend I'm always interested when agents repeatedly reduce the asking price  

For example, Peter Heron have been marketing this property in Benton Avenue, Town End Farm since February 2014 and have dropped the price on two occasions to its current level of £85,000


It looks to have been Owner-Occupied for many years and has suffered from a lack of investment (the kitchen in particular is dated) but even so, if purchased and rented in its current condition with no improvement works it would achieve £495 per month – a Gross Yield of 6.9%

Town End Farm is a popular area and with three bedroom properties in short supply in Sunderland, based on the similar properties we have let in the surrounding area it would only take a new kitchen & a lick of paint throughout to increase that rental price nearer to £550 per month

I would budget a modest £5,000 spend to bring the property to a good rental standard.  What would interest the investor is that the total spend on the property would still be much less than the £94,950 it was originally marketed for but the Gross Yield would increase to 7.3%

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