Terraced vs Semis for Buy to Let investment in Nuneaton…

semi       VS     terrace

A lovely couple from Whitestone came to our offices this morning to discuss potentially investing in property for Buy to Let in Nuneaton after reading the ‘Nuneaton Property Blog’. I reminded them that one of the most important considerations you will have to make before investing is considering the balance between annual return/yield and the annual value increase/capital growth of the property that you buy.

We looked at a couple of options for them by going onto zoopla and seeing what was available to purchase at the minute and working out what the yield and potential capital growth of the properties would be. With a budget of upto £150,000 it gave us quite a substantial figure to work with but the findings blew their minds.

We started by looking at a 3 bedroom terrace house in the town centre which is currently on the market for £87,500. Initially, I presumed, with such a reasonable asking price, this property would need substantial work doing to it before it could be rented out…it goes to show that presuming is never a good idea! This house was done up beautifully with a new Kitchen and bathroom and basically ready to go! A house of this condition in this area currently rents for around £600 PCM which would give an annual yield of 8.23% which is a very impressive figure. Research also shows that over the past year, terrace properties have on average increased by 10% with an average value increase of £10k.

We then looked at a 3 bedroom semi detached property which is on the market currently for £145,000, this is in the not so sought after area of Bucks Hill in Nuneaton, but with it being a semi with a drive, would also be easy to rent to families etc looking for an estate, local to schools within that area. This property is in need of a fair bit of modernisation, new kitchen and bathroom would be a must in order to achieve a higher rental, and once this work was carried out the property could rent for around £650 PCM. This however would only give an annual yield of 5.38%, and I say ‘only’ because in comparison to the substantially cheaper terrace property fetching 8.23% there is quite a difference. When we researched the trends in semi detached properties in this area, findings showed that over the past year there has been an increase of 2% from an average of £150k to £152k.

Median Property Asking Prices By Type in Nuneaton (£000’s)

 

Nov 2014 Nov 2015 Change
  Detached £249,950 £269,950 +8%
  Semi £150,000 £152,500 +2%
 
  Terraced £99,950 £110,000 +10%
  Flat £95,000 £94,950 -0%
  All £149,950 £160,000 +7%

Needless to say, the couple were impressed with the information we were able to provide and are looking to make an offer on the terraced property, which they have asked if we would fully managed for them. They will also be seeking our advice on the purchase of a second terrace property in Nuneaton for around the same value. They asked the question about 2 bedroom terraces vs 3 bedroom terraces and whether the demand was the same. From experience we have had no problem in renting out either, they fly off the shelves like hotcakes in Nuneaton, but interestingly, from doing some research, in the past 12 months 3 bedrooms in Nuneaton have increased by 18% on average whereas 2 bedrooms have only increased by 5%.

If you are looking for Buy to Let opportunities in Nuneaton and would like some help/advice on what would make the ideal purchase, please feel free to come in and see us on Bond Street or give us a call on 02477 674545 and we would be more than happy to see you.