BTL. Are 3/4 beds better than 2?

[Phooey]

Tidy, low maintenance modern 2 bed houses (not flats/apartments) in my area are approx £145-150k and let (easily) for around £500-£580pcm. 2 beds seem in short supply and therefore sell/rent quickly..

3 beds seem to let at around 675-700 (so 20%+ on a 2 bed) and sell for £160-£190k.

Has anyone else done the maths and thought 2 beds are relatively expensive (due to supply and demand) and think 3 (or possibly 4) beds might be a better long-term investment?

Cheers

[Nickyboy]

I would suggest 2 beds would be more likely to rent easily with couples and new parents wanting to upgrade from their first home

[TheHound]

Generally speaking 2/3 beds (houses) are your best bet but of course it depends on a number of factors and is definitley not a catch all.

My advice would be to talk to a reputable local lettings specilist (ideally not one that does sales as they may have a conflict of interest) about the specific propeties you could be interested in.

[smckeown]

Are they both freehold?

[nct001]

Phooey said:

Tidy, low maintenance modern 2 bed houses (not flats/apartments) in my area are approx £145-150k and let (easily) for around £500-£580pcm. 2 beds seem in short supply and therefore sell/rent quickly..

3 beds seem to let at around 675-700 (so 20%+ on a 2 bed) and sell for £160-£190k.

Has anyone else done the maths and thought 2 beds are relatively expensive (due to supply and demand) and think 3 (or possibly 4) beds might be a better long-term investment?

Cheers

The reason the market values them relatively high is due to their low long term maintenance and ease of renovation compared to 1930s semis which are costly to refurb ie plastered walls vs stud walls, older plumbing, ageing interiors etc. Modern box properties have smaller more manageable plots and so are more suitable for long term rental. And materials used in modern properties are mass produced readily available and very cheap.

An older property can easily cost £50k in maintenance over a decade whilst a modern box nothing to a few grand.

Hope this helps... also make your own mind up, never fully trust estate agents.

[Phooey]

Thanks for replies

That is my thinking nct001 - the newer the better - it's not my day job so need to minimise the work. I should of done it 10 years ago when i looked into it.... need to start researching, again

[Leedssurveyor]

How does that even stack up? gross of low 4%'s never mind your letting fees, management costs' etc. What area is this?

People need to look up north for some great deals. Sheffield for example offers ridiculous returns and has a great student, young professional and academic base in the City Center to let to and achieve NET healthy returns.

[Welshbeef]

For me I only have 3 bed semis in my portfolio all freehold. All with off road parking and always bought in the better areas well worth it better tennants and the capital growth/desirability is higher cannot lose.


One issue I do find is the 1930's houses they are terrible for mould! No leaks, damp course properly insulated yet they all have bloody mould. Tennants "can you sort it" grr you need to ventilate more its caused by humidity and you elect not to use the tumble dryer (as it costs you more in electric) you hand wet clothes on radiators to dry plus you have the heating on low...

[Sir Bagalot]

Yields of just a shade over 4%? No thanks

[Welshbeef]

Sir Bagalot said:

Yields of just a shade over 4%? No thanks

Do you buy them outright or leverage with a mortgage? If the latter lets say a 3 bed £250k with £50k deposit it will rent out at £15k so 30%return. Of course you have mortgage interest so let's say 5%(worst case) on £200k £10k interest leaving you with 10%.

Sure you will have house insurance, liability insurance to take off but that is not a lot.


In addition you have capital growth this year experts are saying 7% ... So 7% growth on £250k = £267.5k



I guess some could look at Berkshire Hathaway shares and say hey they are rubbish they give 0% yield - sure that's because they reinvest and you get capital gain instead (capital gain gives you £10k tax free allowance a year in the UK whereas yield has no allowance assuming you earn more than £10k salary.

[BoRED S2upid]

On those figures the 2 beds are too expensive to buy or don't rent for enough either way the returns aren't great but it depends what you want out of it at the end of the day.