Kite Close’s property market outperforms Houghton Avenue’s by 20%
Last week, a couple approached me to discuss potentially investing in property for Buy to Let. One of the most important considerations you will make before investing is the balance between annual return/yield and the annual value increase/capital growth.
Within the Berewood Estate off Houghton Avenue which have recently been built, in approximately the last 3 years and is a very desirable location at the moment. The average two bedroom mid-terraced house sells at around £250,000 and rents are roughly £1,100 per calendar month.
With this in mind, it was a surprise to find that similar sized two bedroom mid-terraced houses on the Wecock Farm Estate off Kite Close, have outperformed those on Berewood. This is because a two bedroom mid-terraced house within the Wecock development can be bought for around £170,000 and the achievable rents can be around £900 per calendar month.
The yield which could be achieved from a two bedroom house on Orchard Meads in Berewood is around 5.3% per year. When we compare this to the possible 6.4% on Merlin Close in Wecock, 20.7% higher than Berewood. However, we must remember that yield is not the sole consideration when investing in Buy to Let properties. Two two bedroom houses have been sold since the first purchasers on Berewood, one house increased by 17.5% and the other increased by 9.5%. A three bedroom house has been resold and that increased by 4.6% in value as well a four bedroom house increased by 3.8%. Overall the property prices have increased roughly by 9% since the development was built in 2013. So as you can see the estate is a desirable place to live and property prices haven’t dropped like some new builds do.
When purchasing a buy to let you need to think about the type of tenant you will attract by it’s surroundings, transport links, schools and shops etc. Different locations will attract different clientele. A one bedroom property will have a more frequent tenancy turn around than a three bedroom family home, all these factors need to be taken into account when selecting a buy to let property.