When you see a property being advertised at less than the
market value it often makes investors sit up & take notice. But then the doubts creep in and thoughts
turn to whether it is worth the time, money and aggravation to turn it into a
successful and profitable rental property.
Take for instance the House that local agent, Astons, is
marketing in Gossops Green, Crawley.
The photos on the website give a clear indication of the
scope of the works needed to attract the best rent. Many investors are
looking for an easy purchase that a tenant can move straight into and minimise
the void period. To achieve the current ceiling rent of £1150 in that
area this house will need a brand new kitchen, new bathroom, redecoration and
carpets throughout. I doubt there will be little change from £20,000 and at
least 2 months without rental income coming in.
But when you see similar houses being advertised at £270,000
it begins to look a more attractive prospect. If no refurbishment were
carried out the property would most likely rent at the lower end of the price
spectrum, £950pcm. The yield calculated
at this rent and on the asking price would be 4.75%, just lower than the
minimum 5% we all strive for.
Interestingly the yield increases if the refurbishment is
carried out. The brave investor would
spend the £20,000 & rent the property at the top end of the rent spectrum
of £1150. Even when adding in the two
months lost rent income the yield increases to 5.2%. In addition to the
increased yield the works may have pushed the value up to that of the similar
properties nearby, £10,000 more than was spent.
 |
| It could have potential |
If you have spotted any investments but unsure of their potential
you are welcome to contact me for advice, my office number is 01293 735000
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