I was chatting to a new Landlord today in her property in Mount Road. She's lived there for nearly four years and knows the area very well, so we were discussing how similar properties on the immediately surrounding streets can achieve very different sale and rental prices
This inspired me to look into whether this anecdotal evidence was supported by the actual house price data and how this translates into rental yields
I chose to look at Mount Road and Kitchener Street, focusing on 3 bedroom terraced properties that are popular with families (I also chose these two roads as to allow contrast between the Victorian terraced properties on Mount Road compared to the predominantly 'Miners Cottage' style properties on Kitchener Street)
Generally three bedroom properties are in short supply in Sunderland, from both a sales and rental point of view, so I'd assume that both roads should be popular with both buyers and tenants alike
Both roads are a 2 minute walk from the popular Barnes Infant & Junior Schools (both rated as 'Good' by Offsted) and Barnes Park and are very close to Sunderland Royal Hospital
The average sold price of a 3 bedroom terrace on Mount Road was £111,000 (based on sales within the last 2 years) and the average price paid for a three bedroom Kitchener Street property was £83,167
Interestingly both streets showed 11 transactions in the two year period
Looking at rents, the average Mount Road rent for the 2 year period was £722.50pcm, (however this was based on only 2 rental properties, one of which we manage) compared to 5 rental properties on Kitchener Street (we manage 2 of them), where the average rent was £523pcm
This works out as a 7.8% Gross Yield for Mount Road compared to 7.5% for Kitchener Street
So whilst rents are significantly higher on Mount Road, the much higher purchase price means the yields are pretty much identical
For investors looking to build a portfolio with the lowest outlay or 'money left in' it would suggest Kitchener Street properties make the best investment - however I wouldn't necessarily say this was the case!
I say this as you should always look at additional factors, not just the yield, when weighing up the best investment
Ultimately each property would need to be judged on its own merit but I would suggest that a Mount Road property would always be more popular than a Kitchener Street property, given the abundance of similar 'cottages' on nearby streets in Barnes and High Barnes (not to mention Millfield and Pallion) compared to a relative scarcity of Victorian terrace style properties such as the ones on Mount Road
Three bedroom Mount Road properties were built as that, however the 3 bedroom properties on Kitchener St would have started out life as a 2 bedroom single storey property and had a Dormer added at some point
Mount Road properties have gardens. With grass! Kitchener Street cottages will only have a rear yard
What all this means is that based on my experience it would be much easier to attract a good, long term tenant for a Mount Road property than a Kitchener Street property
Investors would need to weigh up the benefits from purchasing a more expensive Mount Road property with the need for a higher deposit (based on the above average prices and a 25% deposit you would need around £7,000 more for a deposit on a Mount Road property)
This does prove that whether you think you know the local area well or are investing from afar, you should always seek out local knowledge and expertise and consider more than just the numbers when evaluating your investment purchase
For a free, no obligation chat about any aspect of the Sunderland property market please call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com
This three bedroom terrace in Silksworth is in a lettable condition and looks to offer the scope for 7.8% Gross Yield, based on the Modern Method of Auction price
I'm not a fan of the Modern Method of Auction, I can see how it may appeal to sellers as it passes on the agents costs to the buyer but in doing so it can make the property much less attractive to potential buyers
Looking at the small print on the sale details, this one is being advertised with a starting bid of £63,000 and you'd expect the reserve price to be within 10% of the starting price, so £69,300
Then there's the minimum £5,000+VAT reservation fee so the total outlay may be in the region of £75,300
Even so, based on £495pcm rent it will return 7.8% Gross Yield
It's being advertised by Your Move so click here for details and contact them if you want to arrange a viewing http://www.zoopla.co.uk/for-sale/details/41412395
Call me if you'd like to discuss this or any aspect of property investing in Sunderland - call 0191 567 8577 or email neil.whitfield@belvoirlettings.com
With more and more property investors looking to beat George Osborne's Landlord Tax changes with strategies that give a better return than standard Buy to Let, I thought it worth sharing an excellent article by Lisa Orme of Keys Mortgages about the importance of using the correct finance when purchasing a property to convert into an HMO or even 'buy to sell'
When you purchase a property to convert to a HMO you must use the correct finance to do the conversion
Unfortunately, you cannot simply take out either a Buy to Let mortgage, do the works then redeem it switching to a HMO mortgage
Neither can you take a HMO mortgage at the outset on the basis you intend to convert to a HMO
Buy to Let mortgages are exactly that Buy TO LET not buy to convert or indeed buy to sell
Buy to Let lenders expect that rent is going to be coming in day one to pay the mortgage. Lenders would not allow you to convert or do anything other than minor cosmetic works
Similarly when you take out a HMO mortgage the lender and the valuer has the expectation that the property is let or ready to be let as an up and running HMO, not that weeks or months of work is required prior to the property generating a rental income
If you have a 4 bed 3 reception room property that can be let out as is to 6 tenants with next to no work then that would generally be OK, however if you wanted to add en suites, split rooms, apply for planning etc then this is not acceptable to the lender
The correct options for conversion to a HMO are;
- Cash purchase / refurb followed by HMO mortgage once the refurb is completed
- Bridging loan or short term loan and then refinance (with the same or different lenders)
- Refurb to term type product (usually with the same lender)
If don't follow the above advice and you're lucky your Buy to Let application will get turned down at valuation and you'll just waste a valuation fee, later than that and you'll also face wasted legal fees, broker fees etc.
Complete on the wrong loan and things can get really messy
Using Buy to Let mortgages for conversions or buy to sell and redeem them early and you'll get yourself banned by that lender and potentially find yourself on the CIFAS/Hunter fraud alert system
Don't know what the Hunter fraud alert system is? You should! Click here http://www.nhunter.co.uk/ for their website or here http://www.telegraph.co.uk/finance/personalfinance/borrowing/11467480/The-secret-database-blacklisting-borrowers.html for a more revealing Telegraph article
Use HMO mortgages to do the conversions and similarly you may find yourself banned by the lender
Please contact me to discuss any aspect of property investment in Sunderland, whether it is Buy to Let, HMOs or anything in-between, call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com
This five bedroom terrace is located in one of most sought after parts of Roker close to Roker Park. It's being marketed with no chain and given it is being marketed by Springbok Properties (who specialise in sales for those who want or need to sell quickly) it may be that the owners may accept close to the Offers Over £125,000 price - leaving plenty of scope for a profit if buying to sell
Unfortunately the St Peters Ward is one of areas in Sunderland affected by the 'Article 4' legislation meaning planning permission would need to be sought to change the use from a single dwelling to HMO (otherwise a good cashflowing alternative would have been to let it to working professionals on a room-by-room basis)
Click here for details http://www.zoopla.co.uk/for-sale/details/41438604
Interestingly the most recent comparable sale on this street was last year and the property (done up to a very basic standard) sold for £211,900 - click here for details http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=46704403&sale=76805076&country=england
I'd suggest any potential 'Flipper' would make more by potentially spending a little more on a better quality kitchen and bathroom than the one above, and applying some interior design techniques (even just decorating in a colour scheme fitting of a family home rather than wall-to-wall magnolia) would increase the likely return
Call me if you'd like to discuss this opportunity or any aspect of property investment (be it Buy to Sell or Buy to Let) in Sunderland - call 0191 567 8577 or email neil.whitfield@belvoirlettings.com
This three bedroom end terrace on Colchester Terrace needs a full refurb including some damp proofing and re-pointing, but once complete it will be popular with a range of tenants
It's offered with vacant possession and the decor and the age of the kitchen and bathroom suggests this may be a probate property or one where the owner has been taken into care
It's being advertised at OIRO £110,000 and realistically you should budget for £15,000 of improvements - negotiate a discount on the price and bring the total investment in at around £120,000 it will deliver 6.5% Gross Yield
Whilst the yield is not as high as you can achieve elsewhere in Sunderland, the location means you should never suffer voids and the condition of the property suggests you can add to the value of the property meaning you may be able to remortgage based on the uplifted value and recycle your deposit, leaving only a small amount of the initial investment in the deal
It's being advertised by Peter Heron so contact them for more information or to arrange a viewing https://www.onthemarket.com/details/3071574
Call me if you'd like to discuss this or any aspect of the Sunderland property market - call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com
This 1 bedroom detached Mews style property is ideal for a professional let or serviced accommodation and it is being offered at £25,000 below market value for a quick cash sale
Speed is of the essence as completion must take place within 28 days, if not sooner
The non-negotiable price that's been negotiated with the vendor is £70,000 which is £25,000 below market value (It's currently being marketed by a couple of local estate agents for £99,950)
It will deliver a Gross Yield of 8.8% based on a realistic £550pcm rent or over £18,000 in Serviced Accommodation income based on a conservative 50% occupancy rate
Esplanade Mews Marketing Pack
Click the link above for the Marketing Pack and get in touch with me on 07818034141 (given the need for a quick turnaround) or email neil.whitfield@belvoirlettings.com if you're interested
There are a number of our Landlords/Investors who focus only on properties in the sought after High Barnes area - they may pay a little more than in other areas but are always popular and attract Good Tenants
This three bedroom property needs a full refurb but once complete will be attractive and will appeal to a range of tenants
It's being advertised for offers in excess of £85,000 and you would be wise to factor in a further £15,000 for improvements but even so given the most recent sales in this street have all been for £100,000 or above for 2 bedroom properties (the most expensive one being £114,900)
Based on the above and £595pcm rent it will return 7.1% Gross Yield
Click here for details www.onthemarket.com/details/2537888 and contact the selling agent Peter Heron for details or to arrange a viewing
Call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com to discuss this, investing in High Barnes or any aspect of the Sunderland property market
This 2 bedroom ground floor flat in Moorside has just come onto the market and will be popular with tenants working at the nearby Doxford International business park
It's for sale at £69,950 and based on achieving £450pcm rent it will return 7.7% Gross Yield
It's got the original electric heating that came with these properties when built in the 1960's and 70's so it may be worth considering spending more to install gas central heating - this will make it more popular and could result in you being able to command a higher rent (upto £495pcm)
One thing to consider is the length of the remaining lease - we know from other property owners who have flats in Moorside that the remaining lease is getting to around the length that causes mortgage companies to have second thoughts (each lender is different but it's generally considered tricky to get a mortgage if the lease is less than 60 or 70 years)
It's on the market with Peter Heron so click here for details https://www.onthemarket.com/details/2242401 and give them a call for more information or to arrange a viewing
If you'd like to discuss this or any aspect of property investment in Sunderland please give me a call on 0191 567 8577 or email neil.whitfield@belvoirlettings.com
This three bedroom semi is located close to Pallion shops, Metro and the Pallion Industrial Estate. It needs a full refurb but once completed will appeal to family tenants
It's being marketed at £64,950 but based on paying this price and spending around £15,000 on the work (it needs full redecoration, flooring and a new kitchen and bathroom in order to attract a Good Tenant) it will return 7.4% Gross Yield based on a realistic £495pcm rent - £550 may be achievable if it's delivered to a really good standard
It's on with Grant Philip Lowes Estate Agents so click here for details http://www.zoopla.co.uk/for-sale/details/41319038 and contact them for more info or to arrange a viewing
If you'd like to discuss this investment or any aspect of the Sunderland property market please call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com
