AUCTION CAUTION and 6% Yield INVESTOR ALERT

Today’s Medway Property News blog post is about a new buy-to-let deal in Gillingham. The Sidney Road property only came onto the Medway property market on Friday and has a guide price of £145,000.

http://www.rightmove.co.uk/property-for-sale/property-53828479.html

If you were to consider taking it on as a single-let, this property could fetch £800 per month. I would calculate two weeks’ void period per year into your calculations (which is average in this area), around £5,000 to modernise the property, and £4,750 for stamp duty charges. These calculations give a 6% yield, which is decent as a family-let. Keep in mind that yields could be increased if it were converted into a student-let or home of multiple occupancy (HMO); if that’s something you’re interested in doing, get in touch because I can help you secure guaranteed rent.

If the house were converted into four en-suites, maintaining the living area downstairs and an extra WC, then each room could fetch around £500 to bring gross monthly rent of around £2,000. With it being so close to the Universities at Medway campus, this would be very attractive as a Gillingham student-let.

Meanwhile, capital growth has been decent in the area. Average prices for terraced houses on Sidney Rd have increased from £131,000 in January 2014 to £177,000 in December 2015. Properties are being snapped up quickly for the student market so this property is well worth a look.

Diary: Auction Caution

In one of my recent Medway Property News blog articles, which you can view here, I mentioned a house in Gillingham that was coming up for auction. The three-bedroom, ex-housing-association property is on Balmoral Rd next to Gillingham station and was in a terrible state, having long been abandoned, and had a guide price of £135,000. Intrigued, I went along to see it for myself with my architect and builder (who are great workmen by the way, let me know if you want their details).

Squatters had taken up residence and defaced the inside of the building. Part of the roof was exposed. The house needed total rewiring, new plumbing, re-plastering, rebuilding of the bathroom, kitchen and living rooms. You get the picture! I scoured the building, taking measurements and discussing development possibilities such as loft and basement conversions.

It needed an investment of between £45,000 and £65,000 to bring it up to scratch as a five-bed home of multiple occupancy (HMO). After such a renovation, its value would be in the region of £200,000. That would bring in a 12.38% yield, presenting a great investment as a buy-to-hold.

However, I worked out in the end that margins would be too narrow unless the property could be bought for £140,000 or less. Pre-auction offers were rejected, so I left the deal and looked forward to see what it would ultimately go for.

Unbelievably, at Barnard Marcus’s auction the property alone went for £200,000! Seeing as no other terraced house on Balmoral Road has sold for more than £186,000 in the last two years (Land Registry), and this one needs so much work, it’s a questionable investment on the successful bidder’s part. But that’s the current state of the market!

If you liked this article drop me an email at hasan@bullfinchproperties.co.uk or give me a call on 07944 726676. Alternatively, some of my readers are arranging to see me at my offices in the Innovation Centre Medway.

Like the Bullfinch Properties Facebook page here or follow me on LinkedIn here. You can have every post delivered direct to your inbox, all the latest on Medway house prices and fresh buy-to-let deals by subscribing to the blog.

One comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s