8.6% yield on Strood buy-to-let HMO up for auction

Hello my Medway property blog readers. Entering the Medway property market only in the past 24 hours is a four-bedroom property in Strood, Rochester, at Le Meridien Piccadilly, W1J 0BH. It’s up for auction sale on 8th December, 2016, commencing at 1pm, with a guide price of £180,000.

My brother actually owns and rents a property a couple of doors down from this one. The location is desirable as it is directly opposite Strood station, with high speed links that take just over half an hour to get into central London. Rental prices have been steadily increasing, alongside strong capital growth of terraced properties in the postcode, showing a 42.77% increase over the last five years.

This one is advertised as having four bedrooms and therefore should achieve between £925-£1,000 as a single let. With the property needing possible structural repair and full refurbishment programme the guide price of £180,000 seems a bit high as properties on nearby Grove Road have been selling for a similar price in good condition. If you get the property for £180k and spend £40k on it you are looking at around a 5% yield as a single let.

As a four bedroom HMO this property would more likely achieve closer to £2,000 per month. With two weeks’ void period per room, which I find average in the area, you should achieve £23,000 per year. If you bought the property for £180k, and budgeting for an £80k spend (to add en suites in every room and for possible structural repairs), you would get a 8.6% yield – a healthy yield indeed. For a 10%+ yield you would need to get the property for £150k or less.

And this property may well go for less than its guide price, because the auction is in central London while the house is in our little Medway property market. Therefore fewer people at the auction may have bothered to take the proper due diligence and research necessary to bid and therefore there may be less competition.

As always the figures I have written here are estimations so please do your own careful due diligence. If you visit the property do let me know how you get along.

Also, don’t forget to book onto the Property Vault Medway next week, Tuesday 22nd October, at 6.30pm. We have a great speaker, Bernard Woods, teaching us about interior design. Please book at www.thepropertyvaultuk.com.

Best,
Hasan
07944 726676

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