MarkJ Posted April 29, 2009 Report Share Posted April 29, 2009 I am buying a property 'on request' for a potential tenant. She's told me what she needs, and basically has agreed to rent whatever I buy for her. I've seen two properties each with their own strengths and weaknesses. I'm torn between the two. Property 1 built 1950s 3 bed semi 3 double bedrooms Master bedrooms approx same size bedroom 2 marginally larger bedroom 3 bigger no bedroom 4 Conservatory Extra Room downstairs (study/playroom) Coverted integral garage breakfast island in Kitchen integrated fridge/freezer/dishwasher Through lounge-dining room-conservatory No garage Property 2 built 15 years ago on a smart, new-build estate 4 bed detatched 2 double 2 single bedrooms en-suite master bedroom Downstairs loo Utility Room separate lounge and dining room cummulatively larger lounge and dining room bigger garden large patio Integral garage If we buy Property 1 we're probably getting it at open market value. Property 2 is around 12.5% BMV. In term of yeild, Property 1 comes in at around 6.3%, whereas property 2 comes in around 6%. Both are very cashflow positive. Property 1 will generate around £355 p/m and Property 2 will generate around £347.50 per month. The tenant situation means no voids so no problem with either. I'm thinking in terms of future 'rentability' if/when the tenant moves out and also re-sale. Which would you buy? Link to comment Share on other sites More sharing options...
Selkirk Posted April 29, 2009 Report Share Posted April 29, 2009 I'd buy neither just to have a T. This is a business and you should treat it as such, do your research and get a property that will maximise your return. Rental, location etc. cheers Selkirk Link to comment Share on other sites More sharing options...
partrim Posted April 29, 2009 Report Share Posted April 29, 2009 Agree with Selkirk. Please, please, please purchase the right property for the right reasons and don't be rushed into a decision! In terms of rentability - it's impossible to say from this info. From my experience the biggest influence on rentability is supply and demand in the local market. The rest is just detail (within reason)! Other than that, and assuming everything esle is equal, I would go for Propoerty 2. A 15 yr old house is likely to be easier to maintain than a 50 year old house, plus if you're buying BVM it has got to be good for your capital investment. Only problem here is what is market value in the current economic climate? I would also have an eye on the marketability of the property for when you want to realise your capital investment. Which would be easier to sell when you need / want to? In my experience the requirement for en suite is creeping up the priority list of purchasers (less so renters)! Link to comment Share on other sites More sharing options...
Chestnut Posted April 29, 2009 Report Share Posted April 29, 2009 I agree and would check the local paper and work out generally what people want and what's more difficult to let in the area. This tenant might be unique! Link to comment Share on other sites More sharing options...
Gee Posted April 30, 2009 Report Share Posted April 30, 2009 If you are after Capital growth and the least risk, remember Location location location. The old adage of buy the worst house in the best area you can afford still holds true. Don't forget if you buy a propety in a worse location, the return may be initially higher but it will be more riskier and your management costs will be higher (in terms of time and hassle and potential break ins etc) It all depends on your attitude to risk and the reasons you are entering the BTL market. Cheers Gee Link to comment Share on other sites More sharing options...
Ruud100 Posted May 11, 2009 Report Share Posted May 11, 2009 I am buying a property 'on request' for a potential tenant. She's told me what she needs, and basically has agreed to rent whatever I buy for her. I've seen two properties each with their own strengths and weaknesses. I'm torn between the two. Property 1 built 1950s 3 bed semi 3 double bedrooms Master bedrooms approx same size bedroom 2 marginally larger bedroom 3 bigger no bedroom 4 Conservatory Extra Room downstairs (study/playroom) Coverted integral garage breakfast island in Kitchen integrated fridge/freezer/dishwasher Through lounge-dining room-conservatory No garage Property 2 built 15 years ago on a smart, new-build estate 4 bed detatched 2 double 2 single bedrooms en-suite master bedroom Downstairs loo Utility Room separate lounge and dining room cummulatively larger lounge and dining room bigger garden large patio Integral garage If we buy Property 1 we're probably getting it at open market value. Property 2 is around 12.5% BMV. In term of yeild, Property 1 comes in at around 6.3%, whereas property 2 comes in around 6%. Both are very cashflow positive. Property 1 will generate around £355 p/m and Property 2 will generate around £347.50 per month. The tenant situation means no voids so no problem with either. I'm thinking in terms of future 'rentability' if/when the tenant moves out and also re-sale. Which would you buy? I would go for property 2, my reason behind this is that with a bigger garden, patio and muliple bedrooms would attract families with kids which would help for the resale. Are these properties close together, if not have you done your research on up and coming projects in the area such as a shopping centre, new train stations, near town centres etc. Good luck, Ruud100 Link to comment Share on other sites More sharing options...
MarkJ Posted May 12, 2009 Author Report Share Posted May 12, 2009 Thanks for all the feedback. To update you all I have gone for Property 2. Number of reasons; 1) AFter negotiatiation I got it down to around 12.5% under market value (the same style one sold in Dec 08). Couldnt get near that on the other one. 2) It's actually a 'nicer' property, and it's in a nicer area 3) Low maintenance as it's much newer 4) Property 2 is near an airbase and opposite a private school so there's two natural sources of tenants should my tenant leave Mark Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted May 14, 2009 Report Share Posted May 14, 2009 Neither - market prices still going down - min yield to allow for further correction is 10% IMHO Link to comment Share on other sites More sharing options...
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