2 bed Flat or 2 bed Terrace - Which makes the best Investment in Waterlooville?
One of our landlords called the other day asking for a bit of advice, he’s looking to add to his portfolio and isn’t sure if a 2 bed flat or terraced house would be best. My question to him was “what are you looking for from the investment - capital growth in the property or a great yield?”
Answering this question will help you figure out which property you should buy...The average asking price of a 2 bed flat in Waterlooville today is £185,650 compared to £237,997 for a 2 bed terraced house. A 2 bed flat achieves an average rental price of £751.61 per month compared to £880.56 per month for a two bed terrace.
That’s a yield of 4.9% for the 2 bed flat against 4.4% for the 2 bed terrace.
When purchasing a flat always check:
1. Term of the lease
2. Current ground rent charges
3. Service/maintenance charges
The above costs are for the owner of the property to pay and not something that can be passed onto the tenant, therefore costing these figures in is crucial. These costs usually include, but can vary so check on each individual building, buildings insurance, external maintenance to the block, cleaning of the communal areas and external of the windows and gardening if applicable and a garden isn’t part of the individual property.
Therefore the yield of 4.9% for the 2 bed flat will reduce down once the service charges and ground rent are taken into account making the yield approximately around 3.4%
So surely, the 2 bed terrace is the better bet?
Well, it does offer a better rate of return, but the 2 bed flat has it’s benefits of the building insurance and external maintenance being covered. In the long run will this initial lower yield be better once the maintenance of a 2 bed house has been taken into account?
Please remember: From April 2018 all residential rented properties need to have an energy rating of between A-E, any property with a rating of F and G will require improvement works to increase the energy rating before the property can be let.
If you would like more information – please feel free to contact me.