Are semi-detached houses a good investment?
Posted on 19th June 2019
Yes and no. Many people see the lower end of the market as being their first foray into the investment market and many people continue to buy at that level instead of buying semi-detached houses, whereas some people purchase semi-detached properties exclusively. The beauty of the investment market is that there are so many different strategies that can be utilised, so how do semi-detached investments compare.
I think it is safe to say that buying well-presented semi-detached homes for in excess of £170,000 is probably not the way to go if you want to take your investment strategy seriously. However, there are ways to make investments in semi-detached houses work for you.
Ex-council housing can be picked up for a much lower price than private residential housing in many cases and can be quite lucrative. As society has changed and the estates around Leicester have improved, pretty much without exception, over the last 15-20 years, we have seen more people look at these areas as a serious option when buying to let. Solid properties in residential areas with schools close by and in many cases off road parking and gardens, make these houses ideal family homes, and tenants tend to stay for a much longer time than they do in terraced houses or flats.
A decent semi-detached house in these areas, with little work to be done, will probably set you back in the region of £140,000-£150,000, and the rental income on 3 bed properties in these areas is in the region of £675-£750 per calendar month, meaning a not too shabby potential yield of 6.4% annually, better than having cash sat in the bank!
If on the other hand you would prefer to purchase in a “better area”, whatever that means, then you are going to be looking at semi-detached homes in excess of £165,000 in many cases and they simply start to become less viable, as crucially the rental income is very similar to those ex-council houses we have just discussed.
My advice on this would be to look to find a house in poor condition, purchase at a similar price to what you would pay for the ex-council property, build the value back into it with a refurbishment, and enjoy the benefits of extra equity in the property, plus a fairly decent yield based on your purchase price, but you must remember to factor in your refurbishment costs, and crucially the time it can take! I have seen so many instances of people taking on projects because they “fancy having a go”, and it taking so long that there cash reserves are eaten away by bills and insurances, and then the dream becomes a nightmare!
First rule when taking on a project is to hit it hard and fast!
Hope that has given you food for thought on the investment side of things and some of the options should you be considering entering the buy-to-let market over the next few months. Things can change quickly in property, make sure you get up to date advice when looking at this type of purchase.
For more information on this and anything else relating to the housing market just give us a call on 0116 3409989 or to find out a guide on your property's current value go to http://valuation.thepropertyfox.co.uk/
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