Ok so you’ve decided to take the plunge, become a landlord and invest your savings in a buy to let apartment or flat in Weymouth in order to boost your income and try to build in a little capital growth. What are the things to look out for when starting this search?
We had a similar brief a while ago from an investor who came into the office and this is the results of the research we did for him.
The average price for a one bed flat locally is around £80,000 and it would typically rent for £450 which gives a return of 6.75%
A two bed’s average rent is around £625 and costs on average £130000 giving you a return of 5.7% some 16% lower. Capital appreciation over the long term is likely to be similar on both. We have a healthy demand for both one bed and two beds so there is unlikely to be an advantage to owning either one or the other for letability.
As flats are leasehold consideration must be given to the management of the block. If it is a large block managed by a professional management company the maintenance and fees can easily come to the equivalent of two months’ rent over a year, however if you are buying a flat in a converted house there is often little organised maintenance and it is done on a ‘just in time’ basis with the bills being shared by the leaseholders. A purpose built flat with a professional management company will cost more to buy and run but the rent achieved can be up to £100 more per month. It is important to factor in all these costs when doing your sums!
Comparing also two bed houses which have no expensive management fees to pay, cost on average in Weymouth in the region of £140,000 to £160,000 and will rent for £750 if they are nice. There is a constant good demand from potential tenants and the return here is up to 6.4%. with all the advantages of a freehold over a leasehold for you the owner.
If you are looking in Weymouth or Dorchester to make an investment such as this please pop into our office’s at 2 St Thomas Street, Weymouth for a chat when you are passing.