I was talking with a new landlord at depth about her first investment purchase in Crawley and how far her money could stretch. She had read the Martin & Co Intellligence Report & was interested to find out that over 50% of the total demand was for 2 bedroom properties. By taking into consideration the rent band of £750 to £1000 being the most popular I wanted to show her what I thought could be the perfect property investment.
Sissinghurst Close is located in Pound Hill, the most sought after neighbourhood in Crawley. The road has a mixture of 2,3 & 4 bedroom houses with easy access to good schools, local amenities and the mainline railway station at Three Bridges. We have just rented a lovely little 2 bedroom mid-terrace house with a parking space for £975pcm. Based on the latest sold price of £229,950 (2014) it has achieved a gross yield of 5.08%. I checked land registry and one of these houses sold in 2004 for £165,000 which means a captal increase of 39.36% over the decade.
|2 Bedroom Houses Account for Over 50% of Demand|
I wanted to demonstrate that you could achieve the same capital growth and a great yield but put down a smaller deposit. As a comparison I used another 2 bedroom house we have let recently in Burbeach Close, Bewbush. Again its a mid-terrace house with a parking space but Bewbush is not so highly sort after. There is a higher concentration of local authority housing nearby and the area is much further away from the railway station. The house let for the lower price of £925pcm but the latest sold price for a two bedroom house in Burbeach Close was £180,000 in 2014 meaning that it has achieved a much higher yield of 6.2%. In effect the gross yield of the house in Bewbush is 22% higher than the gross yield of the house in Pound Hill. Ten years ago the Bewbush houses were selling for £130,000, their capital growth has been 38.46% over the decade – not that far behind the Pound hill house and comfortably close to the Southern Counties region average of 40.4%.
For investors using a 70% loan to value mortgage the house in Bewbush would need a deposit £14985 lower than the Pound Hill house.
If you would like to receive a copy of the Martin & Co Market Intelligence report or have any questions about property investment you can find me at the Martin & Co office on Orchard Street in Crawley.