I've just spotted this 1 bedroom 'Student Pod' in a recently converted (commerical to residential) student development is being advertised at an eye-wateringly cheap £35k so given it will attract interest I thought that I'd better give you my opinions...
On first inspection it looks to be a great deal, the studios rent out at £85 per week for 51 weeks (£4,335pa) or £87.50 for 44 weeks (£3,850pa) which looks to deliver a juicy 11% Gross Yield even based on the lower figure
Click here for the very professional website http://www.fortisstudentliving.com/accommodation/sunderland/dunn-house/#propertyTabs1
But it's not all good...there will be a service charge and given the on site facilities include a gym, 24h security, games room,plus the all important (costly) lift you'd be wise to budget on around £100pcm for this
This in itself is not going to make it a bad deal and I would say the location of this one is good to appeal to those at the St Peters Campus
I would be more concerned about the long term viability of the student market, given there is an ever increasing number of similar developments popping up all over the city, and each bright & shiny new one does tend to attract student tenants like moths to a flame, leaving the existing developments finding it increasingly hard to appeal to a finite number of students
Sunderland hasn't yet reached the saturation point/over-supply of some other cities such as Manchester, Leeds etc but that's not to say it won't happen in the future
If this happens, and at some point you fail to let it for an academic year you will get no income for the full 12 months, as unlike other property types you only have a fixed window to get it let to students and won't be able to get other tenant types to rent it whilst you wait for the next student intake
I would also say that this sort of accommodation tends to appeal to the International Student market and there is no guarantee that Sunderland will continue to attract such students in the same numbers in the future - if International Student numbers decline how would you get your money back out, given you'd be alongside many others in a similar situation?
I would also also ask why, if it is all so good, this is back on the market (for a low price) given the development was only completed and sold off to investors a couple of years ago...?
Don't get me wrong, I'm not saying avoid this at all costs - it could be right for someone as a cheap Let and Forget - however please do your own thorough due diligence, including a site visit and make sure you have confidence in your ability to let it 100% of the time, year after year
It's being marketed by Martin & Co so click here for details http://www.rightmove.co.uk/property-for-sale/property-55549250.html and call them to arrange a viewing
If you want to discuss this investment, the student market in general or any aspect of the Sunderland property market call me on 0191 567 8577 or email firstname.lastname@example.org